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Compute the predetermined overhead allocation rate

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Question - Case Construction Company, a three-year-old business, provides contracting and construction services to a variety of clients. Given that each construction job is different from the others, Susan Byrd, the company's accountant, decided to use a job-order costing system to allocate costs to the different jobs. She decided to use construction labour-hours as the basis for overhead allocation. In December 2021, she estimated the following amounts for the year 2022:

Direct materials $14,470,000

Construction labour $9,700,000

Overhead $4,850,000

Construction labour-hours 388,000

Byrd recorded the following for the second quarter of 2022 for the three jobs that the company started and completed during the quarter.

School Residential Cinema

Direct materials $2,894,000 $2,170,500 $4,341,000

Construction labour-hours 66,800 33,400 16,700

Required -

1. Compute the predetermined overhead allocation rate for 2022 and apply overhead to the three jobs.

2. Compute the cost of each job.

Reference no: EM132705292

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