Question

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $118,800 and expected direct labor hours of 10,800 for the current fiscal year. If job number 117 incurs 1,430 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for:

Answer 1

Answer:

$15,730

Explanation:

under absorption costing overheads are charged to product units using an overhead absorption rate.

The overhead absorption rate is determined using the formula below:

Overhead absorption rate is = Budgeted Overheads / budgeted Labour hours

Factory overhead Absorption rate  (OAR)=  $118,800/10,800

                                               = $11 per hour

 Amount of 0verhead to charge Number number 117

                                  = 11 × 1,430

                                  = $15,730