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Meenach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 66,000 direct labor-hours, total fixed manufacturing overhead cost of $99,000, and a variable manufacturing overhead rate of $4.50 per direct labor-hour. Recently Job X387 was completed and required 220 direct labor-hours.
Required:
Calculate the amount of overhead applied to Job X387. (Do not round intermediate calculations.)

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Answer:

Allocated MOH= $1,320

Explanation:

Giving the following information:

Estimated fixed overhead= $99,000

Estimated variable overhead= $4.5 per unit

Estimated direct labor hour= 66,000

Recently Job X387 was completed and required 220 direct labor-hours.

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= (99,000/66,000) + 4.5

Predetermined manufacturing overhead rate= $6 per direct labor hour

Now, we can allocate overhead:

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

Allocated MOH= 6*220

Allocated MOH= $1,320