Luthan Company uses a predetermined overhead rate of 2260 pe

Luthan Company uses a predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 of total manufacturing overhead for an estimated activity level of 12,000 direct labor-hours.

    The company incurred actual total manufacturing overhead costs of $267,000 and 10,900 total direct labor-hours during the period.

Determine the amount of manufacturing overhead that would have been applied to all jobs during the period.

Solution

The amount of manufacturing overhead that would have been applied to all jobs during the period

=Predetermined overhead rate*Actual total direct labor hours

which is equal to

=($22.60*10900)

which is equal to

=$246340.