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Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa’s total estimated overhead is $390,000 and estimated direct labor is $260,000. Determine the amount of overhead applied to a job which used $21,000 of direct labor.

Answer :

Answer:

31500

Explanation:

Given: Total estimated overhead is $390,000

            Estimated direct labor is $260,000.

Now, finding the predetermined overhead rate.

We know, predetermined overhead rate= [tex]\frac{estimated\ overhead}{estimated\ direct\ labor}[/tex]

⇒Predetermined overhead rate= [tex]\frac{390000}{260000}[/tex]

∴  Predetermined overhead rate= 1.5

Next, finding the amount of overhead applied to a job which used $21,000 of direct labor.

∴ Amount of overhead applied to a job= [tex]21000\times 1.5= 31500[/tex]

Hence, 31500 is the amount of overhead applied to a job.

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