Elliott Company uses a predetermined overhead rate based on machine-hours to app
ID: 2412039 • Letter: E
Question
Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:
Direct materials used.......................................................
$4,200
Direct labor-hours worked..............................................
300
Direct labor rate per hour................................................
$8.00
Machine-hours used........................................................
200
Predetermined overhead rate per machine-hour..............
$15.00
What is the total manufacturing cost recorded on Job 1501?
$8,800
$9,600
$10,300
$11,100
Direct materials used.......................................................
$4,200
Direct labor-hours worked..............................................
300
Direct labor rate per hour................................................
$8.00
Machine-hours used........................................................
200
Predetermined overhead rate per machine-hour..............
$15.00
Explanation / Answer
Total overhead=Predetermined overhead rate*Machine hours
=(15*200)=$3000
Direct labor=(Direct labor-hours worked*Direct labor rate per hour)
=(300*8)=$2400
Hence total manufacturing cost=Direct materials used+Direct labor+Total overhead
=$(4200+2400+3000)
which is equal to
=$9600.
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