Question

E&J Auto Body Shop estimated overhead cost for the coming year will be $15,000 and 5,000 direct labor hours will be worked. The amount of overhead cost applied by E&J Auto Body Shop to one of its jobs, if the jobs required 10 direct labors hours to complete, would be :_______

a. $150
b. $ 30
c. $ 50
d. $ 15

Answer 1

correct option is b. $ 30

Step-by-step explanation:

given data

overhead cost = $15,000

direct labor hours = 5,000

required direct labors hours = 10

solution

we get here Fixed Overhead Rate that is

Fixed Overhead Rate = estimated overhead cost ÷ direct labor hours ........1

Fixed Overhead Rate =
`(15000)/(5000)`

Fixed Overhead Rate = $3 per labor hour

and

Job overhead applied express as

overhead = Fixed Overhead Rate × required direct labors hours ..........2

overhead = $3 × 10

overhead = $30

so correct option is b. $ 30