Question
Molly just started working as a junior accountant at a manufacturing firm that uses job order costing. She has asked you, the senior accountant, for
Molly just started working as a junior accountant at a manufacturing firm that uses job order costing. She has asked you, the senior accountant, for some help with calculating overhead allocation rates. The following data has been provided for the year ended December 31, 2020: Estimated Actual Machine Hours 10,000 11,000 Direct Labor Hours 20,000 19,000 Direct Labor Cost $200,000 $190,000 Manufacturing Overhead Cost $560,000 $600,000 Actual data from August is as follows: August Machine Hours 900 Direct Labor Hours 1,600 Direct Labor Cost $16,000 a. If the company uses a normal costing system and has selected directlaborhours as the appropriate allocation base, what is the allocation rate? b. Using the allocation rate determined in part 1, what is the amount of overhead allocated for the month ended August 31, 2020?
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