Question

Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead costs of $270,000 and 11,000 total direct labor-hours during the period.
Required:
a) Determine the amount of manufacturing overhead that would have been applied to units of product during the period.

Answer 1

Answer:

$248,600

Explanation:

The computation of amount of manufacturing overhead is shown below:-

Amount of manufacturing overhead would have been applied = Predetermined overhead rate × Actual direct labor-hours

= $22.60 × 11,000

= $248,600

Therefore for computing the amount of manufacturing overhead we simply multiply the Predetermined overhead rate with Actual direct labor-hours