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Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hou

ID: 2608525 • Letter: L

Question

Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours.

    The company incurred actual total manufacturing overhead costs of $267,000 and 10,900 total direct labor-hours during the period.

  

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

Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours.

    The company incurred actual total manufacturing overhead costs of $267,000 and 10,900 total direct labor-hours during the period.

Explanation / Answer

The amount of manufacturing overhead that would have been applied to all jobs during the period

=Predetermined overhead rate*Actual total direct labor hours

which is equal to

=($22.60*10900)

which is equal to

=$246340.