Olympia Manufacturing uses a predetermined overhead allocation rate based on direct labor cost. At the beginning of the year, Olympia estimated total manufacturing overhead costs at $1,010,000 and total direct labor costs at $820,000. In June, Job 511 was completed. The details of Job 511 are shown below. $$\begin{array} { | l | r | }
\hline \text { Direct materials cost } & \$ 24,000 \
\hline \text { Direct labor cost } & \$ 13,000 \
\hline \text { Direct labor hours } & 500 \text { hours } \
\hline \text { Units of product produced } & 500 \text { hours } \
\hline
\end{array}$$ What is the amount of manufacturing overhead costs allocated to Job 511? (Round any percentages to two decimal places and your final answer to the nearest dollar.)

Question

Olympia Manufacturing uses a predetermined overhead allocation rate based on direct labor cost. At the beginning of the year, Olympia estimated total manufacturing overhead costs at $1,010,000 and total direct labor costs at $820,000. In June, Job 511 was completed. The details of Job 511 are shown below. $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost } & \$ 24,000 \
\hline \text { Direct labor cost } & \$ 13,000 \
\hline \text { Direct labor hours } & 500 \text { hours } \
\hline \text { Units of product produced } & 500 \text { hours } \
\hline
\end{array}$$ What is the amount of manufacturing overhead costs allocated to Job 511? (Round any percentages to two decimal places and your final answer to the nearest dollar.)

Quizplus · Accepted Answer

The predetermined overhead allocation rate is $1,010,000/$820,000 = $1.23 per direct labor dollar. The amount of manufacturing overhead costs allocated to Job 511 is $13,000 x $1.23 = $16,012.

Olympia Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Direct