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13 July, 23:33

Item 3Item 3 Manufacturing overhead was estimated to be $385,700 for the year along with 20,300 direct labor hours. Actual manufacturing overhead was $423,400, and actual labor hours were 21,600. The amount debited to the Manufacturing Overhead account would be:

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  1. 14 July, 00:02
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    Debit manufacturing overhead with actual overhead incurred-$423,400

    Explanation:

    Absorbed overhead = Overhead absorption rate (OAR) * actual direct labour hours

    OAR = Budgeted overhead / Budgeted labour hours

    = $385,700/20,300 hours=

    Absorbed overhead = $19 * 21,600 = $410,400

    Absorbed overhead = $410,400.

    In accounting for overhead the following entries would be observed

    Debit manufacturing overhead with actual overhead incurred-$423,400

    And credit manufacturing overhead with absorbed overhead - $410,400

    The difference of $13000 is the over absorbed overhead
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