Question

Leisure Life manufactures a variety of sporting equipment. The firm's predetermined overhead application rate was 150 per cent of direct labour cost. Job 104 included direct material of $20 000 and total costs were $25 000. The manufacturing overhead applied to Job 104 to date is

Answer 1

3,000

Explanation:

The computation of manufacturing overhead applied to Job 104 is shown below:-

We assume direct labor be x

Total Cost = Direct Materials + Direct Labor + overhead

$20,000 + x + 1.5x = $25,000

x = 2,000

Manufacturing Overhead = Direct Labor 2,000 × 150%

= 3,000

Therefore the manufacturing overhead applied to Job 104 is 3,000