A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?Multiple choice question.$60,000$50,000$15,000$75,000
Question
A company works on three jobs and incurs the following: Direct materials - 100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?Multiple choice question.50,00075,000
Solution
To calculate the overhead that will be allocated to the three jobs, you need to multiply the direct labor costs by the predetermined overhead rate.
Here's how you do it:
- Identify the direct labor costs. In this case, it's $100,000.
- Identify the predetermined overhead rate. In this case, it's 60% or 0.60 in decimal form.
- Multiply the direct labor costs by the predetermined overhead rate.
So, 60,000
Therefore, $60,000 of overhead will be allocated to the three jobs.
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