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Luthan Company uses a plantwide predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $257,400 of total manufacturing overhead cost for an estimated activity level of 11,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $249,000 and 10,800 total direct labor-hours during the period. Required: Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

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Answer:

$252,720

Explanation:

As for the provided details:

Predetermined overhead rate is based on 11,000 direct labor hours.

The rate identified as $23.40

Since the actual activity is less than the standard labor hours, that is actual labor hours = 10,800

Thus, actual overheads to be applied based on predetermined rate shall be = Rate determined [tex]\times[/tex] actual hours

= $23.40 [tex]\times[/tex] 10,800 = $252,720

Manufacturing overhead cost is referred to as the total sum of the amount that includes all the indirect costs incurred in the manufacturing of the products. This cost is added to the products of the company in order to determine all the direct and indirect labor costs.

Amount of manufacturing overhead cost= $252,720

The predetermined overhead rate is based on 11,000 direct labor hours.

The rate identified = $23.40

Since the actual activity is less than the standard labor hours, that is actual labor hours = 10,800

Thus, actual overheads to be applied based on predetermined rate shall be = Rate determined  actual hours

= [tex]\$23.40\times10,800 = \$252,720[/tex]

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