Question

Luthan Company uses a plantwide predetermined overhead rate of $22.50 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $270,000 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $268,000 and 11,500 total direct labor-hours during the period.

Required: Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Answer 1

amount of manufacturing overhead cost that would have been applied

=$22.50 per direct labor-hour*11,500 total direct labor-hours

which is equal to

=$258750