Murphy Manufacturing estimated $100,000 in manufacturing overhead and 5,000 direct labor hours for 2016. Actual overhead for the year was $120,000 and 7,500 actual direct labor-hours were used. How much overhead was applied to a job completed during 2016 that used 200 direct labor-hours?

Overhead applied to a job completed during 2016 that used 200 direct labor-hours was $4,000.

Explanation:

Estimated Manufacturing Overhead = $100,000

Estimated direct labor hours = 5,000 hours

Predetermined overhead rate = $100,000 / 5,000

Predetermined overhead rate = $20 per labor hour

Actual direct labor hours = 7,500 hours

Actual direct labour hour applied to the job = 200 hours

Overhead applies to the Job = 200 hours x $20 = $4,000