Question

Jeremy Corporation estimated manufacturing overhead costs for the year to be $510,000. Jeremy also estimated 9,000 machine hours and 3,000 direct labor hours for the year. It bases the predetermined overhead allocation rate on machine hours. On January 31, Job 25 was completed. It required 4 machine hours and 4 direct labor hours.

a. What is the amount of manufacturing overhead allocated to the completed job?

Answer 1

$226.67

Step-by-step explanation:

The amount of manufacturing overhead allocated to the completed job is a function of the machine hours used in completing the job. This is the basis for estimating the manufacturing overhead costs for the year.

As such, given that job 25 was completed in 4 machine hours, overhead allocated

= (4/9000) × $510,000

= $226.67