Luthan Company uses a plantwide predetermined overhead rate

Luthan Company uses a plantwide predetermined overhead rate of $2310 per direct labor-hour. This predetermined rete was based on a cost formula that estimated $277,200 of total manufacturing overhead cost for an estimated activity level of 12000 direct labor- hours. The company Incurred actual total manufacturing overhead cost of $268,000 and 11,500 total direct labor-hours during the period. Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Solution

Manufacturing Overhead Applied = Predetermined Overhead Rate * Actual total direct labor hours during the period

= $ 23.10 per direct labor hour * 11,500 direct labor hours

= $ 265,650

Hence the correct answer is $ 265,650