Question

XYZ Company uses a job order costing system and has established a pre-determined overhead rate of...

XYZ Company uses a job order costing system and has established a pre-determined overhead
rate of 145% of direct labor cost. Job #231 was charged with direct materials of $69,000
and had a total cost of $228,250.

Calculate the amount of applied overhead charged to Job #231.
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Answer #1
Cost of direct labour and applied overheads = Total cost of Job - Direct material cost
Cost of direct labour and applied overheads = $228250 - $69000 = $1,59,250
Let us assume direct labour cost be y.
Hence applied overheads be 1.45y
The equation will be as under,
y + 1.45y = 159250
2.45y = 159250
y = 65000
Direct Labour cost = $65000
Therefore , applied overhead cost = 1.45 * 65000 = $94,250
Applied Overhead charged to Job 231 = $94,250
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