Luthan Company uses a plantwide predetermined overhead rate of $22.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $266,400 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 $266,000 and 12,600 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.

Question

Itzel

Business

15 March, 19:22

Luthan Company uses a plantwide predetermined overhead rate of $22.20 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $266,400 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 $266,000 and 12,600 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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Macey Schwartz · Answer 1

The amount of manufacturing overhead cost that would have been applied to all jobs during the period is $279,720

Explanation:

The computation of the amount of manufacturing overhead is shown below:

= Predetermined overhead rate per direct labor-hour * total direct labor-hours

= $22.20 * 12,600 direct labors

= $279,720

Since the predetermined overhead rate is already given in the question, so there is no need to recalculate it and the other items which are mentioned are not relevant for the computation part. Hence, ignored it