Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,200 hours and the total estimated manufacturing overhead was $594,960. At the end of the year, actual direct labor-hours for the year were 22,150 hours and the actual manufacturing overhead for the year was $594,960. Overhead at the end of the year was:a. $1,390 underapplied b. $1,340 overapplied c. $1,340 underapplied d. $1,390 overapplied

Question

Liberty Russo

Business

23 March, 15:13

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,200 hours and the total estimated manufacturing overhead was $594,960. At the end of the year, actual direct labor-hours for the year were 22,150 hours and the actual manufacturing overhead for the year was $594,960. Overhead at the end of the year was:a. $1,390 underapplied b. $1,340 overapplied c. $1,340 underapplied d. $1,390 overapplied

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Answers (1)

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Kody Phillips · Answer 1

c. Under applied $ 1,340

Explanation:

Computation of predetermined overhead rate

Estimated manufacturing overhead $ 594,960

Estimated direct labor hours 22,200 hours

Predetermined overhead rate per direct labor hour

$ 594,960 / 22,200 hours $ 26.80 per hour

Actual Direct Labor hours 22,150 hours

Applied overhead at predetermined direct labor rate

$ 26.80 * 22,150 hours $ 593,680

Actual overhead $ 594,960

Overhead under applied $ (1,340)