At the beginning of the year, manufacturing overhead for the year was estimated
ID: 2424824 • Letter: A
Question
At the beginning of the year, manufacturing overhead for the year was estimated to be $283,400. At the end of the year, actual direct labor-hours for the year were 22,600 hours, the actual manufacturing overhead for the year was $266,400, and manufacturing overhead for the year was overapplied by $27,400. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been
At the beginning of the year, manufacturing overhead for the year was estimated to be $283,400. At the end of the year, actual direct labor-hours for the year were 22,600 hours, the actual manufacturing overhead for the year was $266,400, and manufacturing overhead for the year was overapplied by $27,400. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been
Explanation / Answer
Overapplied overheads = Applied overheads -Actual overheads
$27,000 = ($283,400/Estimated direct labor hours)*22,600-$266,400
Estimated direct labor hours = 21,829.72 or 21,830 hours
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