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28 May, 08:07

Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: Manufacturing overhead costs$ 630,000 Direct labor cost$1,650,000 Machine hours90,000 At the end of the year, the company had actually incurred the following: Direct labor cost $1,230,000 Depreciation on manufacturing plant and equipment 480,000 Property taxes on plant 19,500 Sales salaries $ 26,500 Delivery drivers' wages 17,000 Plant janitors' wages 8,000Machine hours 56,500 hours How much manufacturing overhead was allocated to jobs during the year?

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  1. 28 May, 09:28
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    Allocated MOH = $395,500

    Explanation:

    Giving the following information:

    Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required.

    Manufacturing overhead costs$ 630,000; Machine hours90,000

    Actual machine hours:

    Machine hours 56,500

    First, we need to calculate the predetermined overhead rate:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Estimated manufacturing overhead rate = 630,000/90,000 = $7 per machine hour

    Now, we can allocate overhead based on actual machine hours:

    Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

    Allocated MOH = 7*56,500 = $395,500
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