Predetermined Manufacturing Overhead Rates
Response to the following problem:
The Boise Manufacturing Company uses a job order costing system. For Job #221, the production manager requisitioned $1,350 of direct materials and used 50 hours of direct labor at $19 per hour. Manufacturing overhead is applied on the basis of direct labor hours, using a predetermined overhead rate. At the beginning of the year, $956,250 of manufacturing overhead costs were estimated based on a forecast of 225,000 direct labor hours. Prepare a summary of the costs for Job #221.
(Note: You have to calculate the predetermined overhead rate.)