Westan Corporation uses a predetermined overhead rate of $23.10 per direct labor

Question

Westan Corporation uses a predetermined overhead rate of $23.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $277,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $267,000 and 12,200 total direct labor-hours during the period. Required: Determine the amount of manufacturing overhead that would have been applied to all jobs during the period. Manufacturing overhead applied:

Explanation / Answer

Manufacturing overhead applied = Predetermine overhead rate*Actual labour hours

= 23.10*12200

Manufacturing overhead applied = $281820

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