Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hou
ID: 2608525 • Letter: L
Question
Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 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 10,900 total direct labor-hours during the period.
Determine the amount of manufacturing overhead that would have been applied to all jobs during the period.
Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 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 10,900 total direct labor-hours during the period.
Explanation / Answer
The amount of manufacturing overhead that would have been applied to all jobs during the period
=Predetermined overhead rate*Actual total direct labor hours
which is equal to
=($22.60*10900)
which is equal to
=$246340.
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