Chelsea, Inc. uses the job costing method and uses direct labor hours as the allocation base. In 2016, the total estimated and actual overhead costs for Job 3489 were $250,000 and $275,000, respectively. The total estimated and actual direct labor hours for Job 3489 were 25,000 and 28,000, respectively. Which of the following represents the MOH allocated to Job 3489?1. Predetermined MOH rate = total estimated manufacturing overhead costs / total estimated amount of the allocation base2. $250,000 / 25,000 DLH = $103. MOH allocated to job = predetermined MOH rate * actual amount of allocation base used by the job4. $10 * 28,000 DLH = $280,000

Question

Aaron Jackson

Business

24 July, 12:26

Chelsea, Inc. uses the job costing method and uses direct labor hours as the allocation base. In 2016, the total estimated and actual overhead costs for Job 3489 were $250,000 and $275,000, respectively. The total estimated and actual direct labor hours for Job 3489 were 25,000 and 28,000, respectively. Which of the following represents the MOH allocated to Job 3489?1. Predetermined MOH rate = total estimated manufacturing overhead costs / total estimated amount of the allocation base2. $250,000 / 25,000 DLH = $103. MOH allocated to job = predetermined MOH rate * actual amount of allocation base used by the job4. $10 * 28,000 DLH = $280,000

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Ashlee Gardner · Answer 1

3. MOH allocated to job = predetermined MOH rate * actual amount of allocation base used by the job

Explanation:

3. MOH allocated to job = predetermined MOH rate * actual amount of allocation base used by the job

The predetermined overhead rate is used to apply manufacturing overhead costs to production jobs. the quantity of a cost driver required by a particular job is multiplied by a predetermined overhead rate to determine the amount of overhead cost applied to the job.

An estimate is made of

the amount of manufacturing over head that will be incurred during a specific period of time and the amount of the cost driver (or activity base) that will be used or incurred during the same time period. the predetermined overhead rate is computed as follows

Predetermined Overhead Rate = Budgeted Manufacturing Overhead Cost / Budgeted amount of cost driver

The predetermined overhead rate is used to apply manufacturing overhead costs to production jobs. The quantity of the cost driver (or activity base) required by a particular job is multiplied by the predetermined overhead rate to determine the amount of overhead cost applied to the job.