Starlight Company uses a job costing system.Starlight Company uses estimated direct labor hours of 180,000 and estimated manufacturing overhead costs of $360,000 in establishing its predetermined manufacturing overhead rate.Actual results for the year showed: Actual manufacturing overhead cost $353,000
Allocated manufacturing overhead cost 340,000
The number of direct labor hours worked during the period was:

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as estimated overhead costs divided by estimated direct labor hours, which is $360,000 / 180,000 hours = $2 per hour. The allocated overhead cost is $340,000, so the actual direct labor hours worked is $340,000 / $2 per hour = 170,000 hours.

Starlight Company Uses a Job Costing System