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Luthan Company uses a predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate was based on 11,000 estimated direct labor-hours and $257,400 of estimated total manufacturing overhead.

The company incurred actual total manufacturing overhead costs of $249,000 and 10,800 total direct labor-hours during the period.

Required:

Determine the amount of manufacturing overhead that would have been applied to units of product during the period.

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Answer:

Allocated MOH= $252,720

Explanation:

Giving the following information:

Luthan Company uses a predetermined overhead rate of $23.40 per direct labor-hour.

The company incurred actual 10,800 total direct labor-hours during the period.

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

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

Allocated MOH= 23.4*10,800= $252,720

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