At the beginning of the year, Blevins Company estimated manufacturing overhead cost of $416,000 and direct labor cost of $520,000. The firm allocates manufacturing overhead on the basis of direct labor cost. For the month of August, direct labor cost was $36,900. Calculate manufacturing overhead allocated to production for the month of August.

Question

Chase Chang

Business

6 April, 15:41

At the beginning of the year, Blevins Company estimated manufacturing overhead cost of $416,000 and direct labor cost of $520,000. The firm allocates manufacturing overhead on the basis of direct labor cost. For the month of August, direct labor cost was $36,900. Calculate manufacturing overhead allocated to production for the month of August.

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Shyanne Duran · Answer 1

Allocated MOH = $29,520

Explanation:

Giving the following information:

Estimated manufacturing overhead cost = $416,000

Direct labor cost = $520,000.

The firm allocates manufacturing overhead based on direct labor cost. For August, direct labor cost was $36,900.

First, we need to calculate the estimated overhead rate:

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

Estimated manufacturing overhead rate = 416,000/520,000 = $0.8 per direct labor dollar.

Now, we can allocate overhead:

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

Allocated MOH = 0.8*36,900 = $29,520