Peterson Heating & Cooling installs and services commercial heating and cooling systems. Peterson uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Peterson estimated that its overhead for the coming year would be $63,750. It also anticipated using 4,250 direct labor hours for the year. In October, Peterson started and completed the following two jobs:

Instructions are listed below.

Explanation:

Giving the following information:

Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Peterson estimated that its overhead for the coming year would be $63,750. It also anticipated using 4,250 direct labor hours for the year.

We were not provided with the information regarding the two jobs, but, we can provide the mechanism to guide an

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 63,750/4,250= $15 per direct labor hour.

Now, to allocate overhead, you need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

For example, the direct labor hours of Job XX are 25.

Allocated MOH= 15*25= $375

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