Adams Manufacturing allocates overhead to production on the basis of direct labor costs.At the beginning of the year,Adams estimated total overhead of $396,000;materials of $410,000 and direct labor of $220,000.During the year Adams incurred $418,000 in materials costs,$413,200 in overhead costs and $224,000 in direct labor costs.Compute the amount of overhead applied to jobs during the year.
A)$396,000.
B)$424,450.
C)$413,190.
D)$413,200.
E)$403,200.

Question

Quizplus · Accepted Answer

The overhead rate is calculated as estimated overhead ($396,000) divided by estimated direct labor ($220,000), which equals 1.8. The overhead applied is then this rate multiplied by actual direct labor costs ($224,000), resulting in $403,200.

Adams Manufacturing Allocates Overhead to Production on the Basis of Direct