Question

urvin Enterprises is a manufacturing company that had no beginning inventories. A subset of the transactions that it recorded during a recent month is shown below.

Jurvin Enterprises uses a plantwide predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 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 10,800 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

Solution :

The formula for calculating the amount of manufacturing overhead cost that would have been applied to all jobs during the period is

= Actual direct labor Hours * Predetermined overhead rate

As per the information available in the question we have

Actual direct labor Hours = 10,800 direct labor hours ;

Predetermined overhead rate = $ 22.60 per labor hour

Applying the above information in the formula we have the amount of manufacturing overhead cost that would have been applied to all jobs during the period as

= 10,800 * $ 22.60

= $ 244,080

Thus the amount of manufacturing overhead cost that would have been applied to all jobs during the period is = $ 244,080