Question

QS 15-7 Applying overhead LO P3 At the beginning of the year, a company predicts total overhead costs of $852,500. The company applies overhead using machine hours and estimates it will use 1,550 machine hours during the year. What amount of overhead should be applied to Job 65A if that job uses 28 machine hours during January?

Answer 1

Allocated MOH= $15,400

Step-by-step explanation:

Giving the following information:

Estimated manufacturing overhead= $852,500

Estimated machine-hours= 1,550

Job 65A:

28 machine hours

First, we need to calculate the estimated manufacturing overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 852,500/1,550= $550 per machine hour

Now, we can allocate overhead to Job 65A:

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

Allocated MOH= 550*28= $15,400