Luthan Company uses a plantwide predetermined overhead rate of $23.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $278,400 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 $269,000 and 12,100 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.

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Business

Liam Adams

17 April, 03:40

Luthan Company uses a plantwide predetermined overhead rate of $23.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $278,400 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 $269,000 and 12,100 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.

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Payton Hatfield · Answer 1

Manufacturing overhead cost applied = $280,720

Explanation:

Giving the following information:

Plantwide predetermined overhead rate of $23.20 per direct labor-hour.

Estimated $278,400 of total manufacturing overhead cost.

Estimated activity level of 12,000 direct labor-hours.

The company incurred actual total manufacturing overhead costs of $269,000 and 12,100 total direct labor-hours during the period.

Manufacturing overhead cost applied = actual direct labor hours * predetermined overhead rate

Manufacturing overhead cost applied = 12100 * 23.20 = $280,720