At the beginning of the year, manufacturing overhead for the year was estimated to be $821,100. At the end of the year, actual direct labor-hours for the year were 36,280 hours, the actual manufacturing overhead for the year was $790,000, and manufacturing overhead for the year was overapplied by $44,440. 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:

estimated direct labor hours = 35,700 hours

Explanation:

Giving the following information:

Estimated overhead = $821,100.

Actual direct-labor hours = 36,280 hours

Actual manufacturing overhead = $790,000

Manufacturing overhead for the year was overapplied by $44,440.

We need to reverse engineer the overhead application process to calculate the estimated direct labor hours.

Under/over applied overhead = real overhead - allocated overhead

-44,440 = 790,000 - allocated overhead

allocated overhead = 834,440

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

834,440 = Estimated manufacturing overhead rate*36,280

Estimated manufacturing overhead rate = $23

Finally, we can determine the estimated direct labor hours:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

23 = 821,100 / estimated direct labor hours

estimated direct labor hours = 821,100/23

estimated direct labor hours = 35,700 hours