Prather Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 50,000 Total fixed manufacturing overhead cost $ 285,000 Variable manufacturing overhead per direct labor-hour $ 3.80 Recently, Job P513 was completed with the following characteristics: Number of units in the job 10 Total direct labor-hours 20 Direct materials $ 710 Direct labor cost $ 500 The amount of overhead applied to Job P513 is closest to:

Allocated MOH= $114

Explanation:

Giving the following information:

Total direct labor-hours 50,000

Total fixed manufacturing overhead cost $ 285,000

Variable manufacturing overhead per direct labor-hour $3.80

Job P513:

Total direct labor-hours 20

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 285,000/50,000

Estimated manufacturing overhead rate= $5.7 per direct labor hour

Now, we can determine the allocated overhead to Job P513:

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

Allocated MOH= 5.7*20

Allocated MOH= $114

this business is a price setter.

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