Question

Assume (1) estimated fixed manufacturing overhead for the coming period of $204,000, (2) estimated variable manufacturing overhead of $2.00 per direct labor hour, (3) actual manufacturing overhead for the period of $320,000, (4) actual direct labor-hours worked of 54,000 hours, and (5) estimated direct labor-hours to be worked in the coming period of 55,000 hours. The amount of overhead applied to production during the period is closest to:

Answer 1

Answer:

Allocated MOH= $308,340

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (204,000/55,000) + 2

Predetermined manufacturing overhead rate= $5.71 per direct labor hour

Now, we can allocate overhead based on actual hours:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 5.71*54,000

Allocated MOH= $308,340