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

Question

Ernest Henson

Business

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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Joy Rodriguez · Answer 1

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