Question

114.8Magnolia Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 20,200 actual direct labor-hours and incurred $142,500 of actual manufacturing overhead cost. They had estimated at the beginning of the year that 17,600 direct labor-hours would be worked and $140,800 of manufacturing overhead costs incurred. The Corporation had calculated a predetermined overhead rate of $8 per direct labor-hour. The Corporation's manufacturing overhead for the year was: Multiple Choice overapplied by $1,700 underapplied by $19,100 underapplied by $1,700 overapplied by $19,100

Answer 1

Answer:

overapplied by $19,100

Explanation:

The calculation of manufacturing overhead for the year is shown below:-

Manufacturing overhead cost applied = Actual direct labor hours × Predetermined overhead rate

= 20,200 × $8

= $161,600

Manufacturing overhead for the year = Actual overhead - Applied overhead

= $142,500 - $161,600

= $19,100 overapplied

So, for determining the manufacturing overhead for the year we simply applied the above formula.