Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $241,600 of manufacturing overhead for an estimated allocation base of $151,000 direct material dollar What’s J? Manufacturing overhead cost was applied to jobs $?
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Question & Answer: Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis o…..
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Predetermined overhead rate = estimated manufacturing overhead/estimated direct material dollars
Predetermined overhead rate = $241,600/$151,000 = $1.60 per dollar of direct material used
Manufacturing overhead applied to Job S = Direct materials used in Job S*$1.60