Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

Question

Guest

Business

3 February, 13:10

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

+5

Answers (1)

Know the Answer?

Josephine Bentley · Answer 1

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base (machine hours)

Explanation:

Giving the following information:

The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

To allocated overhead costs to a specific job, you need to multiply the estimated rate for the number of machine-hours required for the job.

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base (machine hours)