kayak company uses a job order costing system and allocates its overhead on the basis of direct labor costs. kayak company's production costs for the year were: direct labor, $23,000; direct materials, $43,000; and factory overhead applied $5,300. the predetermined overhead rate was:

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25-10-2022
Business

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kayak company uses a job order costing system and allocates its overhead on the basis of direct labor costs. kayak company's production costs for the year were: direct labor, $23,000; direct materials, $43,000; and factory overhead applied $5,300. the predetermined overhead rate was:

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shomerajeshwari90 shomerajeshwari90 · Answer 1 · 2022-10-28T04:39:51-04:00

The predetermined overhead rate was 0.2304, considering the direct labor and overhead applied.

In job order costing system cost only direct materials and direct labor cost are allocated to each order. Usually overhead is applied with rate, in this case related to direct labor costs. If factory overhead applied was $5,300 and direct labor was $23,000 the predetermined overhead rate is $5,300/$23,000 =0.2304

Sor for direct labor of $23,000 overhead to be applied would be $23000*0.2304 =$6,400

The cost of producing each product is calculated using the job order costing of pricing. This costing method is usually used when the manufacturer has to determine the cost for carrying out a particular task while manufacturing a variety of products that vary from each other.

Learn more about job order costing here:

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