Westan Corporation uses a predetermined overhead rate of $22.30 per direct labor

Question

Westan Corporation uses a predetermined overhead rate of $22.30 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $267,600 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $266,000 and 10,900 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.

Explanation / Answer

Applied Manufacturing Overheads = Predetermined overhead rate*Actual total direct labor hours

Applied Manufacturing Overheads = $ 22.30*10900

Applied Manufacturing Overheads = $ 243,070.

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