Question

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $358,700; materials of 401,000 and direct labor of $211,000. During the year Adams incurred $409,000 in materials costs, $412,300 in overhead costs and $215,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.

Answer 1

Allocated MOH= $365,500

Step-by-step explanation:

Giving the following information:

Estimated total overhead= $358,700

Estimated direct labor cost= $211,000

Actual direct labor cost= $215,000

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 358,700/211,000

Predetermined manufacturing overhead rate= $1.7 per direct labor dollar

Now, we can allocate overhead:

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

Allocated MOH= 1.7*215,000

Allocated MOH= $365,500