Lowden Company has a predetermined overhead rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $53,000 and direct materials cost is $83,000. How much overhead cost should Lowden Company should apply in the current period?

Question

Business

Javier Romero

20 July, 03:57

Lowden Company has a predetermined overhead rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $53,000 and direct materials cost is $83,000. How much overhead cost should Lowden Company should apply in the current period?

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Answers (1)

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Dixie Vincent · Answer 1

The overhead cost which should be applied in the current period amounts to $132,800.

Explanation:

The overhead cost which the company should apply in the current period is computed as:

Overhead cost = Direct Material Cost * Pre - determined overhead rate

= $83,000 * 160%

= $132,800

Therefore, the cost of overhead amount to $132,800 which the Lowden Company should apply in the present period.