Manufacturing Overhead Allocation Base and Calculating the Cost of Jobs. Elko Company expects to incur $800,000 in manufacturing overhead costs this year. During the year, it expects to use 10,000 direct labor hours at a cost of $200,000 and 4,000 machine hours.
Required:
a. Prepare a predetermined overhead rate based on direct labor hours, direct labor cost, and machine hours.
b. Why might Elko Company prefer to use direct labor hours or direct labor costs, rather than machine hours, to allocate manufacturing overhead?
c. Using each of the predetermined overhead rates for Elko Company calculated in part a and the data that follows for job 15B, determine the cost of job 15B.
