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Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based Its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours. The amount of overhead applied to Job M800 is closest to: (Round your intermediate calculations to 2 decimal places.) a. $270b. $825c. $1.380d. $555

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Answer:

b. $825

Explanation:

Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours

Then fixed operating overhead = total fixed manufacturing overhead cost divided by  direct labor-hours

= $90,000/50,000 = $1.8 per labor

The company recently completed Job M800 which required 150 direct labor-hours.

Total overhead = fixed cost + variable cost = ($1.8 + $3.7) * 150 = $825

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