Meenach 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 60,000 direct labor-hours, total fixed manufacturing overhead cost of $114,000, and a variable manufacturing overhead rate of $4.90 per direct labor-hour. required job x387 was completed and required 170 direct labor-hours. calculate the amount of overhead applied to job x387.

Fixed overhead application rate

= Budgeted fixed overhead

  Budgeted direct labour hours

= $114,000

  60,000 hrs

= $1.90 per direct labour hour

Amount of overhead applied to job X387:     $

Variable overhead $4.90 x 170 hours         = 833

Fixed overhead $1.90 x 170 hours               = 323

                                                                            1,156

Explanation:

In this case, there is need to calculate the fixed overhead application rate based on direct labour hours by dividing the the budgeted fixed overhead by budgeted direct labour hours. Then, we will calculate the overhead applied to Job X387 by multiplying the fixed and variable application rate by actual direct labour hours of 170 hours.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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