Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At

Question

Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 10,500 hours and the total estimated manufacturing overhead was $228,900. At the end of the year, actual direct labor-hours for the year were 9,700 hours and the actual manufacturing overhead for the year was $206,840. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)

$4,620 overapplied

$4,620 underapplied

$9,620 underapplied

$9,620 overapplied

Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 10,500 hours and the total estimated manufacturing overhead was $228,900. At the end of the year, actual direct labor-hours for the year were 9,700 hours and the actual manufacturing overhead for the year was $206,840. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)

Explanation / Answer

Predetermined overhead rate=total estimated manufacturing overhead / estimated direct labor-hours

=(228900/10500)=$21.8/direct labor hour

Hence overhead applied=Predetermined overhead rate*Actual direct labor hours

=(21.8*9700)=$211460

Hence overhead overapplied=(211460-206840)=$4620.

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