Question

Question 6 of 15 < > - 14 View Policies Current Attempt in Progress At Roger Mills, Inc., manufacturing overhead was estimated to be $26,400,000 at the start of the year and direct labor hours were estimated to be 240,000. Overhead is applied to jobs using a predetermined overhead rate with direct labor hours as the allocation base. During the current year, Job 525 was assigned 59 labor hours. How much overhead was applied to this job? Overhead applied to the job $ Save for Later Attempts: 0 of 1 used Submit Answer

Answer 1

Solution:

We need to first calculate the predetermined overhead rate for Manufacturing overhead at Roger Mills, Inc.

It is given that allocation base is direct labor hours.

Now, predetermined overhead rate = Total estimated manufacturing overhead / Allocation base i.e. total estimated direct labor hours

Therefore, predetermined overhead rate = $26,400,000/240,000 labor hours

= $110 per labor hour

It is given that Job 525 was assigned 59 labor hours.

Therefore, applied overhead to Job 525 = Assigned labor hours * predetermined overhead rate

= 59 labor hours * $110 per labor hour = $6,490

Hence, an amount of $6,490 was assigned to Job 525 as applied manufacturing overhead.