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XYZ Company applies overhead to jobs using direct labor cost as an activity. For the current year, XYZ's estimated overhead was $250,000 while the actual overhead cost totaled $265,000. XYZ's estimated direct labor cost was $500,000 and the actual direct labor cost amounted to $510,000. For the current year, overhead was: Group of answer choices

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Answer:

Allocated MOH= $255,000

Explanation:

Giving the following information:

XYZ Company applies overhead to jobs using direct labor cost as an activity. For the current year, XYZ's estimated overhead was $250,000;  estimated direct labor cost was $500,000 and the actual direct labor cost amounted to $510,000.

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

Estimated manufacturing overhead rate= 250,000/500,000= 0.5 per direct labor dollar

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

Allocated MOH= 0.5*510,000= $255,000

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