Question

Lowden Company has an overhead application rate of 156% and allocates overhead based on direct material cost. During the current period, direct labor cost is $59,000 and direct materials used cost $89,000. Determine the amount of overhead Lowden Company should record in the current period.

a. $59,000.
b. $37,821.
c. $138,840.
d. $89,000.
e. $57,051.

Answer 1

Allocated overhead= $138,840

Step-by-step explanation:

Giving the following information:

Estimated overhead rate= 156% of direct material cost. During the current period, direct materials used cost $89,000.

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

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

Allocated overhead= 1.56*89,000= $138,840