Question

In December 2016, Shire Computer’s management establishes the 2017 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $754,000 of overhead costs and $580,000 of direct labor cost in year 2017. During March 2017, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for 2017? 2. Using the information on the following job cost sheet, determine the total cost of the job.

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

The predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $754,000 of overhead costs and $580,000 of direct labor cost.

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

Estimated manufacturing overhead rate= 754000/580000= $1.3 per direct labor dolar

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