Lowden Company has an overhead application rate of 156% and allocates overhead based on direct material cost. During the current period, direct labor cost is $59,000 and direct materials used cost $89,000. Determine the amount of overhead Lowden Company should record in the current period.

a. $59,000.

b. $37,821.

c. $138,840.

d. $89,000.

e. $57,051.

Allocated overhead = $138,840

Explanation:

Giving the following information:

Estimated overhead rate = 156% of direct material cost. During the current period, direct materials used cost $89,000.

To allocate overhead, we need to use the following formula:

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

Allocated overhead = 1.56*89,000 = $138,840