Calculation of Manufacturing Overhead Allocation


XYZ Inc. uses machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to various jobs. XYZ budgets that it will incur the following amounts during the year: $25,000 in direct materials, $5,000 in direct manufacturing labor, $20,000 in manufacturing overhead, and 50,000 machine hours.

During the year, XYZ works on Job #24 and incurs the following actual costs/usages for Job #24: $500 in direct materials, $100 in direct labor, and 800 machine hours are used.


1. Determine XYZ’s manufacturing overhead allocation rate.
2. Determine the amount of manufacturing overhead allocated to Job #24.
3. Determine the total cost of Job #24.
4. Prepare any journal entries necessary to account for the direct materials used, direct labor used, and the overhead allocated to Job #24. Assume XYZ pays its employees cash for their services.

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