Prather 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 the following data: Recently, Job P513 was completed with the following characteristics:
The amount of overhead applied to Job P513 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $76
B) $190
C) $266
D) $114

Question

Prather 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 the following data:  Recently, Job P513 was completed with the following characteristics:
 The amount of overhead applied to Job P513 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $76 
B) $190 
C) $266 
D) $114

Quizplus · Accepted Answer

We can calculate the amount of overhead applied to Job P513 using the predetermined overhead rate of $5 per direct labor-hour and the actual direct labor-hours worked on the job.

Direct materials cost for Job P513 = $500
Direct labor cost for Job P513 = $200 (40 hours x $5)
Predetermined overhead rate = $5 per direct labor-hour
Overhead applied to Job P513 = Predetermined overhead rate x Actual direct labor-hours worked on Job P513
Overhead applied to Job P513 = $5 x 38 = $190

Therefore, the closest amount of overhead applied to Job P513 is $190, which is option B.

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