A company has an overhead application rate of 160% and allocates overhead based on direst material cost

Accounting Dec 16, 2020

A company has an overhead application rate of 160% and allocates overhead based on direst material cost. During the current period, direct labor cost is $50,000 and direct materials used cost $80,000. Determine the amount of overhead Lowden Company should record in the current period.

Expert Solution

Lowden should record overhead $128000in the current period.

Explanation

Given,

Direct Material Cost = $80000

Overhead Application rate = 160% of Direct Material

So,

Overhead = 80000* 160%

= 128000

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