The Quadrangle Fabrication Plant suffered a fire incident at the beginning of the year which resulted in loss of property including the accounting records. Some data for the year were retrieved and extracts from it are shown below: The company bases its manufacturing overhead allocation on direct labor hours. How much manufacturing overhead was allocated to production during the year? (Round your intermediate calculations to one decimal place)

Question

The Quadrangle Fabrication Plant suffered a fire incident at the beginning of the year which resulted in loss of property including the accounting records. Some data for the year were retrieved and extracts from it are shown below:  The company bases its manufacturing overhead allocation on direct labor hours. How much manufacturing overhead was allocated to production during the year? (Round your intermediate calculations to one decimal place)

Quizplus · Accepted Answer

To calculate the manufacturing overhead allocated to production during the year, we need to use the following formula:

Manufacturing overhead allocated = Actual direct labor hours x Predetermined overhead rate

We are given that the actual direct labor hours for the year are 14,600. However, we need to calculate the predetermined overhead rate. To do this, we need to use the following formula:

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total direct labor hours

We are given that the estimated total manufacturing overhead cost for the year is $174,876 and the estimated total direct labor hours for the year is 20,100. Plugging these numbers into the formula, we get:

Predetermined overhead rate = $174,876 / 20,100 = $8.70 per direct labor hour

Now we can calculate the manufacturing overhead allocated:

Manufacturing overhead allocated = 14,600 direct labor hours x $8.70 per direct labor hour = $86,730

Therefore, the best choice is B.

The Quadrangle Fabrication Plant Suffered a Fire Incident at the Beginning