Question

The Kraig Corporation manufactures custom-made purses. The following data pertains to Job XY5: Direct materials placed into production $4,000 Direct labor hours worked 50 hours Direct labor rate per hour $15 Machine hours worked 100 hours ​ Plantwide overhead is applied using a plant-wide rate based on direct labor hours. Plantwide overhead was estimated at $60,000 for the year and the direct labor hours were estimated to be 15,000. What is overhead cost assigned to Job XY5?

a. $200
b. $1,500
c. $750
d. $400

Answer 1

a. $200

Step-by-step explanation:

For computing the overhead cost, first, we have to compute the predetermined overhead rate which is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

= $60,000 ÷ 15,000 hours

= $4

Now the actual overhead cost equal to

= Actual direct labor-hours × predetermined overhead rate

= 50 hours × $4

= $200