Question

At the beginning of the year, manufacturing overhead for the year was estimated to be $477,590. At the end of the year, actual direct labor-hours for the year were 29,000 hours, the actual manufacturing overhead for the year was $472,590, and manufacturing overhead for the year was overapplied by $110. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been __________.

Answer 1

Answer:

At the beginning of the year used in the predetermined overhead rate must have been $16.30 per labor hour

Explanation:

Estimated manufacturing overhead = $477,590

Actual Labor hours = 29,000

Actual Manufacturing overhead = $472,590

Over application of manufacturing overhead = $110

As we know:

Over applied manufacturing overhead = Manufacturing overhead applied - Actual manufacturing overhead

$110 = Manufacturing overhead applied - $472,590

Manufacturing overhead applied = $110 + $472,590

Manufacturing overhead applied = $472,700

Manufacturing overhead applied = Actual Labor Hours x Predetermined overhead rate

$472,700 = 29,000 hours x Predetermined overhead rate

Predetermined overhead rate = $472,700 / 29,000 hours

Predetermined overhead rate = $16.30 per labor hour