Wisteria Company Is Debating the Use of Direct Labor Cost

question 190

Essay

Wisteria Company is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing overhead.The following information is available for the most recent year:
Estimated direct labor cost $440,000
Actual direct labor cost $450,000
Estimated manufacturing overhead costs $350,000
Actual manufacturing overhead costs $353,000
Estimated direct labor hours 250,000
Actual direct labor hours 245,000
Determine the following:
a)Predetermined manufacturing overhead rate using direct labor cost as the allocation base
b)Predetermined manufacturing overhead rate using direct labor hours as the allocation base
c)Allocated manufacturing overhead costs based on direct labor cost for the year
d)Allocated manufacturing overhead costs based on direct labor hours for the year

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