Crimp corporation uses direct labor-hours in its predetermined overhead rate. at the beginning of the year, the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000. at the end of the year, actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000. overhead at the end of the year was:

Question

Chanel Carney

Business

7 January, 01:15

Crimp corporation uses direct labor-hours in its predetermined overhead rate. at the beginning of the year, the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000. at the end of the year, actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000. overhead at the end of the year was:

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Damon Harper · Answer 1

First of all, the predetermined overhead will be calculated.

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor hour

Predetermined overhead rate = $ 258,000 : 15,000 hours = $ 17.20 per direct labor hour

Actual manufacturing overheads = $ 253,000

Applied manufacturing overheads = Predetermined overhead rate * Actual direct labor hours

Applied manufacturing overheads = $ 17.20 * 13,100 = 225,320

Applied manufacturing overheads are less than actual manufacturing overheads, thus overheads are under applied.

Actual manufacturing overheads - Applied manufacturing overheads = $ 27,680 under applied