Elkland Heating & Cooling installs and services commercial heating and cooling systems. Elkland uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Elkland estimated that its overhead for the coming year would be $61,500. It also anticipated using 4,100 direct labor hours for the year. In November, Elkland started and completed the following two jobs:
___________________________________Job 101______Job 102
Direct materials used .................................... $15,000...........$10,000
Direct labor hours used ........................................ 155.....................72
Elkland paid a $24-per-hour wage rate to the employees who worked on these two jobs.
Requirements
1. What is Elkland's predetermined overhead rate based on direct labor hours?
2. Calculate the overhead to be allocated to each of the two jobs based on direct labor hours.
3. What is the total cost of Job 101? What is the total cost of Job 102?