Question

Luthan Company uses a plantwide predetermined overhead rate based on direct labor-hour. A cost formula that estimated $2,20,000 of total manufacturing overhead cost for an estimated activity level of 11,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $228,000 and 10,800 total direct labor-hours during the period. Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Answer 1

Answer:

2,16,000

Step-by-step explanation:

Predetermined overhead rate is based on 11,000 direct labor hours.

The rate is  220,000/11,000 =20$

Since the actual activity is less than the standard labor hours, that is actual labor hours = 10,800

Thus, actual overheads to be applied based on predetermined rate shall be = Rate determined *actual hours

= $20*10,800 = $216000