Shire Computer’s predetermined overhead rate is based on direct labor cost. Management estimates the company will incur $728,000 of overhead costs and $560,000 of direct labor cost for the year. During March, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for the year? 2. Use the information on the following job cost sheet to determine the total cost of the job.

Results are below.

Explanation:

We weren't provided with information regarding Job 13-56

To calculate the predetermined overhead rate, we need to use the following formula:

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

Predetermined manufacturing overhead rate= 728,000 / 560,000

Predetermined manufacturing overhead rate= $1.3 per direct labor dollar

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

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

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