Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed: The amount of overhead applied to Job T498 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $568
B) $192
C) $760
D) $952

Question

Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed:  The amount of overhead applied to Job T498 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $568 
B) $192 
C) $760 
D) $952

Quizplus · Accepted Answer

The predetermined overhead rate can be calculated as follows:

Predetermined overhead rate = (Total fixed manufacturing overhead cost + Total variable manufacturing overhead cost) / Total direct labor-hours
Predetermined overhead rate = ($497,000 + (70,000 x $2.40)) / 70,000
Predetermined overhead rate = $557,000 / 70,000
Predetermined overhead rate = $7.96 per direct labor-hour

The amount of overhead applied to Job T498 can be calculated as follows:

Overhead applied to Job T498 = Predetermined overhead rate x Actual direct labor-hours used on Job T498
Overhead applied to Job T498 = $7.96 x 95
Overhead applied to Job T498 = $756.20

Therefore, the closest option to the amount of overhead applied to Job T498 is C) $760.

Lueckenhoff Corporation Uses a Job-Order Costing System with a Single