Question

Braam Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,500 hours. At the end of the year, actual direct labor-hours for the year were 9,700 hours, the actual manufacturing overhead for the year was $143,350, and manufacturing overhead for the year was underapplied by $18,220. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been
A. $164,023
B. $125,130
C. $148,350
D. $138,350

Answer 1

Answer:

C. $148,350

Explanation:

Actual Overhead                           $143,350  

Less: Underapplied Overhead     $18,220

Total Overhead applied                $125,130

Actual Direct labor hours = 9700 hours

Overhead rate = Total Overhead applied / Actual Direct labor hours

Overhead rate = $125,130 / 9700 hours

Overhead rate = $12.90 per hour

Estimated Direct Labor hours = 11,500 hours

Estimated Manufacturing Overhead at the beginning = Estimated Direct Labor hours * Overhead rate  

Estimated Manufacturing Overhead at the beginning = 11,500 hours * $12.90 per hour

Estimated Manufacturing Overhead at the beginning = $148,350