Rivera Company applies manufacturing overhead to jobs on the basis of direct lab

Question

Rivera Company applies manufacturing overhead to jobs on the basis of direct labor cost. Overhead costs are expected (budgeted) to total $240,000 for the year, and direct labor cost is estimated at $240,000. For the year, $185,000 of overhead costs are incurred and the actual direct labor cost was $210,000.

Instructions:

Compute the total amount of overhead that was applied during the year (using the predetermined rate that you calculated in a above), keeping in mind that the actual direct labor cost was $210,000

Explanation / Answer

Predetermined rate = 240000/240000 = 100% Total amount of overhead applied = 210000*100% = $210000

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