Question

Beaver Company used a predetermined overhead rate last year of $2 per direct labor-hour, based on an estimate of 25,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were:

Answer 1

The question is incomplete. Here is the complete question

Beaver Company used a predetermined overhead rate last year of $2 per direct labour hour based on an estimate of 25,000 direct labour hours to be worked during the year. Actual costs and activity during the year were:

Actual manufacturing overhead cost incurred = $47,000

Actual direct labour hours worked = 24,000

What was the under- or overapplied overhead last year?

Answer:

1,000 overapplied

Explanation:

Beaver company made use of a predetermined overhead rate last year

$2 per direct labour hour on an estimate of 25,000 direct labour hours

The actual costs during the year is $47,000

The actual direct labour hours was 24,000

Therefore, the over or underapplied for last year can be calculated as follows

= (24,000×2)-47,000

= 48,000-47,000

= 1,000 overapplied

Hence, the overhead last year was 1,000 overapplied