Question

Luthan Company uses a plantwide predetermined overhead rate of $23.90 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $286,800 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $266,000 and 11,100 total direct labor-hours during the period.

Required:
Determine the amount of manufacturing overhead that would have been applied to units of product during the period.

Answer 1

Allocated MOH= $262,900

Step-by-step explanation:

Giving the following information:

Plantwide predetermined overhead rate= $23.90 per direct labor hour.

The company incurred actual 11,100 total direct labor hours during the period.

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

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

Allocated MOH= 11,000*23.9

Allocated MOH= $262,900