Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours.

The company has provided the following data concerning Job T498 which was recently completed: Number of units in the job 40 Total direct labor-hours 80 Direct materials $ 950 Direct labor cost $ 2,720 The amount of overhead applied to Job T498 is closest to:

a. $568

b. $192

c. $760

d. $952

The correct answer is C.

Explanation:

Giving the following information:

Fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours.

T 498:

Total direct labor-hours 80

First, we need to calculate the estimated manufacturing overhead rate for the period:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = (497,000/70,000) + 2.4 = $9.5 per direct labor hour.

Now we can allocate the overhead to Job 498:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 9.5*80 = $760