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16 May, 22:22

The following annual amounts pertain to the Wolf Company: Estimated Overhead Costs $ 101,988 Estimated Direct Labor hours 67,992 If actual overhead costs for the year amounted to $106,000 and actual direct labor worked amounted to 70,000 hours, then overhead would be Multiple Choice

overapplied by $1,000.

underapplied by $1,000.

overapplied by $1,012.

underapplied by $1,0

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  1. 16 May, 22:32
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    under applied by $1,000.

    Explanation:

    The formula is shown below:

    Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours)

    = $101,998 : 67,992 hours

    = $1.50

    Now we have to find the applied overhead which equal to

    = Actual direct labor-hours * predetermined overhead rate

    = 70,000 hours * $1.50

    = $105,000

    So, the ending overhead equals to

    = Actual manufacturing overhead - actual overhead

    = $106,000 - $105,000

    = $1,000 under-applied
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