Luthan Company uses a predetermined overhead rate of $23.80 per direct labor-hou

Question

Luthan Company uses a predetermined overhead rate of $23.80 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $285,600 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $268,000 and 11,900 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. Manufacturing overhead applied 551,220

Explanation / Answer

Predetrmined overhead rate = 23.80

Actual activity level = 11900

manufacturing overhead applied = predetermined overhead rate x actual activity

=11900*23.8 = 283220

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