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Boston Heating & Cooling installs and services commercial heating and cooling systems. Boston uses job costing to calculate the cost of its jobs. Overhead is
Boston Heating & Cooling installs and services commercial heating and cooling systems. Boston 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, Boston estimated that its overhead for the coming year would be $ It also anticipated using direct labor hours for the year.
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Requirement What is Boston's predetermined overhead rate based on direct labor hours?
Determine the formula to calculate Boston's predetermined overhead rate based on direct labor hours, then calculate the rate.
Predetermined overhead rate
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In May, Boston started and completed the following two jobs:
tableJob Job Direct materials used,$$Direct labor hours used,,
Boston paid a $perhour wage rate to the employees who worked on these two jobs.
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What is Boston's predetermined overhead rate based on direct labor hours?
Calculate the overhead to be allocated to each of the two jobs based on direct labor hours.
What is the total cost of Job What is the total cost of Job
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