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Kenmore Fabrication estimated that direct labor cost for the year would be $640,000. The company also estimated that fixed overhead would be $480,000 and variable overhead would be 35 percent of direct labor cost. Kenmore applies its overhead on the basis of direct labor cost. During the year, all fixed overhead costs were exactly as planned ($480,000) and variable overhead was also incurred as expected. There was $30,000 in under applied overhead. Required: How much did Kenmore spend on direct labor cost during the period?

Kenmore Fabrication estimated that direct labor cost for the year would be $640,000. The company also estimated that fixed overhead would be $480,000 and variable overhead would be 35 percent of direct labor cost. Kenmore applies its overhead on the basis of direct labor cost. During the year, all fixed overhead costs were exactly as planned ($480,000) and variable overhead was also incurred as expected. There was $30,000 in under applied overhead. Required: How much did Kenmore spend on direct labor cost during the period?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kenmore Fabrication estimated that direct labor cost for the year would be $640,000. The company also estimated that fixed overhead would be $480,000 and variable overhead would be 35 percent of direct labor cost. Kenmore applies its overhead on the basis of direct labor cost. During the year, all fixed overhead costs were exactly as planned ($480,000) and variable overhead was also incurred as expected. There was $30,000 in under applied overhead. Required: How much did Kenmore spend on direct labor cost during the period?
Transcribed Image Text:Kenmore Fabrication estimated that direct labor cost for the year would be $640,000. The company also estimated that fixed overhead would be $480,000 and variable overhead would be 35 percent of direct labor cost. Kenmore applies its overhead on the basis of direct labor cost. During the year, all fixed overhead costs were exactly as planned ($480,000) and variable overhead was also incurred as expected. There was $30,000 in under applied overhead. Required: How much did Kenmore spend on direct labor cost during the period?
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