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Natalija [7]
3 years ago
15

Wilson Enterprises applies overhead based on direct labor cost. The company estimates that their overhead for the year will be $

240,000, and direct labor cost to be $300,000. Actual direct labor cost for Martinez Manufacturing was $280,000 and actual overhead costs were $220,000. At the end of the year, manufacturing overhead was:
Business
1 answer:
Tcecarenko [31]3 years ago
6 0

Answer:

Applied Overhead is higher than actual overhead. Hence, manufacturing overhead is $ 4,000

Explanation:

Given data:

estimated overhead = $2,40,000

Labor cost =$2,80,000

Direct labor cost = $3,00,000

Overhead\  rate = \frac{Estimated\  Overhead}{Estimated\ direct\ labor\ cost}

                        = \frac{2,40,000}{3,00,000}      

                         = $ 0.80 per direct labor cost      

Applied\ Overhead = Actual\  Labor\ cost\times Overhead\ rate      

                             = $ 2,80,000\times $ 0.80 Per direct labor cost  

                             =$ 2,24,000        

Actual Overhead cost = $ 2,20,000        

Applied Overhead is more than actual overhead. Hence, manufacturing overhead is $ 4,000.

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