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Davis Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year,...

Davis Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $224,580 and the estimate of direct labor hours was 6,000. Job #145 was completed with 4 direct labor hours. How much overhead was applied to Job #145?

a.) 0.11

b.) 149.72

c.) 37.43

d.) 0

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Answer #1

Answer: $149.72

Explanation:

Given that company uses direct labour hours as the basis for allocation of overhead.

Estimated Manufacturing Overhead= $224,580

Estimated direct labour hours= 6,000 hours

Therefore, Predetermined Overhead rate= Total estimated manufacturing overhead/ Total estimated labour hours

= 224,580 / 6,000

= $37.43 per direct labour hour

Number of Direct Labour hours used in Job #145= 4 hours

Therefore, Overhead applied to Job #145 = $37.43 * 4 hours

= $149.72

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