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8 July, 07:29

Sawyer Company had the following information for the year: Direct materials used$197,700 Direct labor incurred (7,600 hours) $248,100 Actual manufacturing overhead incurred$273,300 Sawyer Company used a predetermined overhead rate using estimated overhead of $382,500 and 8,500 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods balance of $9,400. How much overhead was applied during the year

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  1. 8 July, 07:57
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    Allocated MOH = $342,000

    Explanation:

    Giving the following information:

    Sawyer Company used a predetermined overhead rate using estimated overhead of $382,500 and 8,500 estimated direct labor hours.

    Actual direct labor hours = 7,600

    To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

    Estimated manufacturing overhead rate = 382,500/8,500 = $45 per direct labor hour

    Now, we can allocate overhead:

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

    Allocated MOH = 45*7,600 = $342,000
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