A company allocates overhead to production on the basis of direct labor cost.If the company's total estimated overhead is $870,000 and estimated direct labor cost is $1,160,000,determine the amount of overhead to be allocated to finished goods inventory.There is $791,000 of total direct labor cost in the jobs in the finished goods inventory.
A) $1,054,667
B) $593,250
C) $1,275,853
D) $1,079,482
E) $79,000

Question

Quizplus · Accepted Answer

OH rate = $870,000/$1,160,000 = 75%
OH allocated = 75% x $791,000 = $593,250

A Company Allocates Overhead to Production on the Basis of Direct