XYZ Company applies overhead to jobs using direct labor cost as an activity. For the current year, XYZ's estimated overhead was $250,000 while the actual overhead cost totaled $265,000. XYZ's estimated direct labor cost was $500,000 and the actual direct labor cost amounted to $510,000. For the current year, overhead was: Group of answer choices

Question

Breanna Browning

Business

11 November, 16:15

XYZ Company applies overhead to jobs using direct labor cost as an activity. For the current year, XYZ's estimated overhead was $250,000 while the actual overhead cost totaled $265,000. XYZ's estimated direct labor cost was $500,000 and the actual direct labor cost amounted to $510,000. For the current year, overhead was: Group of answer choices

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Answers (1)

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Lailah George · Answer 1

Allocated MOH = $255,000

Explanation:

Giving the following information:

XYZ Company applies overhead to jobs using direct labor cost as an activity. For the current year, XYZ's estimated overhead was $250,000; estimated direct labor cost was $500,000 and the actual direct labor cost amounted to $510,000.

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

Estimated manufacturing overhead rate = 250,000/500,000 = 0.5 per direct labor dollar

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

Allocated MOH = 0.5*510,000 = $255,000