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Gardner Machine Shop estimates manufacturing overhead costs for the coming year at $ 302 comma 000 . The manufacturing overhead costs will be allocated based on direct labor hours. Gardner estimates 4 comma 000 direct labor hours for the coming year. In​ January, Gardner completed Job​ A33, which used 60 machine hours and 23 direct labor hours. What was the amount of manufacturing overhead allocated to Job​ A33?

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Answer:

$1,736.50

Explanation:

Since manufacturing overhead costs will be allocated based on direct labor hours, only direct labor hours and not machine hours should be considered. If the company estimates 4,000 direct labor hours for the year and manufacturing overhead costs of $302,000, the cost per hour is:

[tex]h=\frac{\$302,000}{4,000}=\$75.50[/tex]

If Job A33 requires 23 direct labor hours, its manufacturing overhead costs are:

[tex]C = 23* \$75.50\\C=\$1,736.50[/tex]

The amount of manufacturing overhead allocated to Job​ A33 is $1,736.50.

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