Question

Exercise 2-2 Apply Overhead Cost to Jobs [LO2-2]

Luthan Company uses a plantwide predetermined overhead rate of $23.30 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $279,600 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours.

The company incurred actual total manufacturing overhead cost of $270,000 and 12,600 total direct labor-hours during the period.

Required:

Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Answer 1

predetermined overhead rate = $23.30 per direct labor hour

Actual direct labor hours used = 12,600

Manufacturing overhead cost applied = predetermined overhead rate x Actual direct labor hours used

= 23.30 x 12,600

= $293,580

The amount of manufacturing overhead cost that would have been applied to all jobs during the period is $293,580.

Kindly comment if you need further assistance. Thanks‼!