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 58,000 actual direct labor-hours and incurred $432,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 60,800 direct labor-hours during the year and incur $383,040 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

Answer 1

Answer: $66, 600

Explanation:

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $373,040 ÷ 60,800 direct labor-hours = $6.3 per direct labor-hour Overhead over or underapplied Actual MOH = $432,000 Applied MOH = $6.3 x 58000 = $365,400 Underapplied MOH = 432,000-365,400 = $66,60