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

Luthan Company uses a predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $257,400 of total manufacturing overhead for an estimated activity level of 11,000 direct labor-hours.

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 all jobs during the period.

Calculated manufacturing overhead is $252,720

Rationale:

Manufacturing overhead = (Actual direct labor hours x Predetermined overhead rate) = (10,800 hours x $23.40) = $252,720.

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