At the beginning of the year, manufacturing overhead for the year was estmated t
ID: 2518650 • Letter: A
Question
At the beginning of the year, manufacturing overhead for the year was estmated to be $262,800 overhead for the year was $251,400, and Ar the end of the year, actual direct labor hours for the year were 22,000 hours, the actual overhead for the year was overapplied by $12,600 If the predetermined overhead rate is based on drect labor hours, then the estimated drect at the beginning of the year used in the predetermined overhead rate must have been O 21,900 direct labor hours O 20,950 direct labor-hours O 19,900 direct labor-hours O 22000 direct labor-hoursExplanation / Answer
Predetermined Overhead Rate = Estimated Overhead / Estimated Direct Labor Hours
$ 12 per hour = $ 262,800/ Estimated Direct Labor Hours
or Estimated Direct Labor Hours = $ 262,800 / $12
= 21,900 Direct labor Hours
Hence the correct answer is 21,900 Direct labor Hours
Note:
Actual Overhead = $ 251,400
Overapplied Overhead = Applied Overhead- Actual Overhead
12,600 = Applied Overhead- $ 251,400
Hence , Applied Overhead = $ 251,400 + 12,600
= $ 264,000
Applied Overhead = Predetermined Overhead Rate * Actual Direct Labor Hours
$ 264,000 = Predetermined Overhead Rate * 22,000 Hours
Hence, Predetermined Overhead Rate = $ 264,000 / 22,000 Hours
= $ 12 per hour
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