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8 October, 22:01

Using the following accounts and an overhead rate of 80% of direct labor cost, determine the amount of applied overhead. Work in Process Inventory Beginning WIP 18,300 Direct Materials54,900 Direct Labor

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  1. 8 October, 22:27
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    Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

    Explanation:

    Giving the following information:

    Overhead is applied base on an estimated overhead rate of 80% of direct labor cost.

    We weren't provided with enough information to calculate the allocated overhead. But, I will give a numerical example as well as the formula:

    To allocate overhead, we need to use the following formula:

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

    For example:

    Direct labor = $50,000

    Allocated overhead = 0.8*50,000 = $40,000
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