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
