Question

Lowden Company has a predetermined overhead rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $53,000 and direct materials cost is $83,000. How much overhead cost should Lowden Company should apply in the current period?

Answer 1

The overhead cost which should be applied in the current period amounts to $132,800.

Step-by-step explanation:

The overhead cost which the company should apply in the current period is computed as:

Overhead cost = Direct Material Cost × Pre- determined overhead rate

= $83,000 × 160%

= $132,800

Therefore, the cost of overhead amount to $132,800 which the Lowden Company should apply in the present period.