Dehner 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 P951 was completed with the following characteristics:

-The amount of overhead applied to Job P951 is closest to:
A) $840
B) $300
C) $540
D) $240

Question

Dehner 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 P951 was completed with the following characteristics:
 
-The amount of overhead applied to Job P951 is closest to:
A) $840 
B) $300 
C) $540 
D) $240

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $96,000 + ($3.00 per direct labor-hour × 40,000 direct labor-hours) = $96,000 + $120,000 = $216,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $216,000 ÷ 40,000 direct labor-hours = $5.40 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.40 per direct labor-hour × 100 direct labor-hours = $540

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