Meenach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 60,000 direct labor-hours, total fixed manufacturing overhead cost of $114,000, and a variable manufacturing overhead rate of $4.90 per direct labor-hour. Required Job X387 was completed and required 170 direct labor-hours. Calculate the amount of overhead applied to Job X387.

Question

Business

Emery Ingram

26 February, 13:50

Meenach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 60,000 direct labor-hours, total fixed manufacturing overhead cost of $114,000, and a variable manufacturing overhead rate of $4.90 per direct labor-hour. Required Job X387 was completed and required 170 direct labor-hours. Calculate the amount of overhead applied to Job X387.

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Parks · Answer 1

Fixed overhead application rate

= Budgeted fixed overhead

Budgeted direct labour hours

= $114,000

60,000 hrs

= $1.90 per direct labour hour

Amount of overhead applied to job X387: $

Variable overhead $4.90 x 170 hours = 833

Fixed overhead $1.90 x 170 hours = 323

1,156

Explanation:

In this case, there is need to calculate the fixed overhead application rate based on direct labour hours by dividing the the budgeted fixed overhead by budgeted direct labour hours. Then, we will calculate the overhead applied to Job X387 by multiplying the fixed and variable application rate by actual direct labour hours of 170 hours.