Deltan corp. allocates overhead to production on the basis of direct labor costs. deltan's total estimated overhead is $450,000 and estimated direct labor is $180,000. determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory.

Question

Twig

Business

9 June, 08:37

Deltan corp. allocates overhead to production on the basis of direct labor costs. deltan's total estimated overhead is $450,000 and estimated direct labor is $180,000. determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory.

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Nick Galloway · Answer 1

Hi there

First find Predetermined oH rate

Predetermined oH rate is

total estimated overhead divided by

estimated direct labor

Predetermined oH rate=

450,000:180,000

=2.5

the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory is

2.5*20,000

=50,000 ... answer

Good luck!