ILO 4344 447 Application of Overhead The Meyers CPA firm has

ILO 4-3,4-4] 4-47 Application of Overhead The Meyers CPA firm has the following overhead budget for the year Overhead Indirect materials Indirect labor Depreciation-Building Depreciation-Furniture Utilities Insurance Property taxes Other expenses 300,000 1,600,000 293,000 25,000 285,000 4,000 48,000 135,000 $2,720,000 Total The firm estimates total direct labor cost for the year to be $1,700,000. The firm uses direct labor co as the cost driver to apply overhead to clients.

Solution

1 Budgeted overhead rate = Estimated overhead/Estimated direct labor cost = 2720000/1700000= 160% 2 Overhead applied: Gargus 4000 =2500*160% Feller 13600 =8500*160% 3 Total job cost: Gargus 6500 =2500+4000 Feller 22100 =8500+13600