Question

rivack Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted variable overhead cost per direct labor-hour $ 4.00 Total budgeted fixed overhead cost per year $ 528,180 Budgeted direct labor-hours (denominator level of activity) 75,455 Actual direct labor-hours 84,000 Standard direct labor-hours allowed for the actual output 82,000 Required: 1. Compute the predetermined overhead rate for the year. Be sure to include the total budgeted fixed overhead and the total budgeted variable overhead in the numerator of your rate. (Round your answer to the nearest whole dollar amount.) 2. Compute the amount of overhead that would be applied to the output of the period. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Budgeted variable overhead cost per direct labor-hour $ 4.00

Total budgeted fixed overhead cost per year $ 528,180

Budgeted direct labor-hours= 75,455

Standard direct labor-hours allowed for the actual output 82,000

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= (528,810/75,455) + 4= $15.63 per direct labor hour

Now, we can allocate overhead based on standard hours allowed:

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

Allocated MOH= 15.63*82,000= $1,281,600