Question

ahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 54,500 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below:
Job Alpha
Direct materials ?
Direct labor ?
Manufacturing overhead applied ?
Total job cost 1,533,500
Job Omega
Direct materials 235,000
Direct labor 345,000
Manufacturing overhead applied 184,000
Total job cost 764,000
Required
1. Calculate the plantwide predetermined overhead rate.
Plantwide predetermined overhead rate.

Answer 1

Answer:

$8 per direct labor hour

Explanation:

1. The computation of the plant wide overhead rate is shown below:

But before that first we have to find out the direct labor hours used which is

= Direct labor cost ÷ direct labors per hour

= $345,000 ÷ $15

= $23,000

Now the predetermined overhead rate is

= Manufacturing overhead applied ÷ direct labor hours

= $184,000 ÷ 23,000

= $8 per direct labor hour