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13 March, 20:29

At the beginning of the year, manufacturing overhead for the year was estimated to be $1,052,700. At the end of the year, actual direct labor-hours for the year were 36,400 hours, the actual manufacturing overhead for the year was $990,000, and manufacturing overhead for the year was overapplied by $65,600. 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: (Do not round intermediate calculation.)

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  1. 13 March, 20:54
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    36,300 hours

    Explanation:

    For computing the estimated direct labor hours first we need to find out the manufacturing overhead applied and predetermined overhead applied which is shown below:-

    Manufacturing overhead applied = Actual Overhead + Over applied Overhead

    = $990,000 + $65,600

    = $1,055,600

    and

    Predetermined overhead rate = Manufacturing overhead applied : Actual direct labor hours

    = $1,055,600 : 36,400 hours

    = 29

    So,

    Estimated direct labor hours = Estimated total manufacturing Overhead : Predetermined overhead rate

    = $1,052,700 : 29

    = 36,300 hours

    So, for computing the estimated direct labor hours we simply applied the above formula.
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