Question

Here are selected basic data for Boston Bracing Company:

Estimated manufacturing overhead	$253,500		Factory utilities	$ 30 comma 500$30,500
Estimated labor hours	35,000		Indirect labor	$ 23 comma 200$23,200
Actual direct labor hours	36,000		Sales commissions	$ 54 comma 300$54,300
Estimated direct labor cost	$325,000		Factory rent	$ 47 comma 900$47,900
Actual direct labor cost	$320,000		Factory property taxes	$ 28 comma 400$28,400
Factory depreciation	$ 66 comma 300$66,300		Indirect materials	$ 33 comma 400$33,400

If the company allocates overhead based on direct labor cost, what are the total actual manufacturing overhead costs?

Answer 1

Answer

Predetermined manufacturing overhead rate = Estimated manufacturing overhead / Estimated direct labor cost

=$253,500/ $325,000 = 78%

The allocated manufacturing overhead costs = Actual direct labor cost x 78%

= $320,000 x 78%=$249,600

The total actual manufacturing overhead costs incurred in the month = Factory depreciation $66,300+ Factory utilities $30,500+ Indirect labor $23,200+ Factory rent $47,900+ Factory property taxes $28,400+ Indirect materials $33,400 = $229,700

Amount of over- or under- applied overheads =Applied $249,600 - Actual $229,700 =$19,900 (over applied)

If the company allocates overhead based on direct labor cost, what are the total actual manufacturing overhead costs?

The total actual manufacturing overhead costs incurred in the month = $229,700