Question

Bayest Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 60,500 actual direct labor-hours and incurred $532,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 61,800 direct labor-hours during the year and incur $451,140 of manufacturing overhead cost.
Required:
1. The Corporation's manufacturing overhead cost for the year was _________. (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

The Corporation's manufacturing overhead cost for the year was $543,840

Explanation:

Giving the following information:

Last year, the Corporation worked 60,500 actual direct labor-hours and incurred $532,000 of actual manufacturing overhead cost.

The Corporation had estimated that it would work 61,800 direct labor-hours.

First, we need 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= 532,000/60,500= $8.80 per direct labor hour.

Now, we can allocate overhead based on actual direct labor hours:

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

Allocated MOH=  8.8*61,800= $543,840