Question

Rector Company manufactures a line of lightweight running shoes. CEO Mark Rector estimated that the company would incur $2,500,000 in manufacturing overhead during the coming year. When Rector Company uses direct labor hours as its manufacturing overhead application base, predetermined overhead rate is $10.00/DLH and when it uses machine hours as its manufacturing overhead application base, predetermined overhead rate is $6.25/MH. Additionally, he estimated the company would operate at a level requiring 250,000 direct labor hours and 400,000 machine hours. At the end of the year, Rector Company had worked 245,000 direct labor hours, used 410,000 machine hours, and incurred $2,515,000 in manufacturing overhead. Collapse question part (a) If Rector Company used direct labor hours as its manufacturing overhead application base, how much overhead was applied to jobs during the year

Answer 1

Allocated MOH= $2,450,000

Step-by-step explanation:

Giving the following information:

When Rector Company uses direct labor hours as its manufacturing overhead application base, the predetermined overhead rate is $10.00/DLH

At the end of the year, Rector Company had worked 245,000 direct labor hours.

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

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

Allocated MOH= 10*245,000

Allocated MOH= $2,450,000