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Shire Computer’s predetermined overhead rate is based on direct labor cost. Management estimates the company will incur $728,000 of overhead costs and $560,000 of direct labor cost for the year. During March, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for the year? 2. Use the information on the following job cost sheet to determine the total cost of the job.

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Answer:

Results are below.

Explanation:

We weren't provided with information regarding Job 13-56

To calculate the predetermined overhead rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 728,000 / 560,000

Predetermined manufacturing overhead rate= $1.3 per direct labor dollar

To allocate overhead, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

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