Question

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,980 hours and the total estimated manufacturing overhead was $540,708. At the end of the year, actual direct labor-hours for the year were 21,950 hours and the actual manufacturing overhead for the year was $540,708. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

$738 Under applied

Explanation:

Calculation for Overhead at the end of the year

First step is to calculate for the POR using this formula

POR=Total estimated manufacturing overhead/Estimated direct labor-hours

Let plug in the formula

POR=$540,708/21,980 hours

POR=$24.6/DLH

Second step is to Calculate for the applied Overhead using this formula

Applied overhead =Actual direct labor-hours ×POR

Let plug in the formula

Applied overhead =21,950 hours×$24.6/DLH

Applied overhead=$539,970

The last step is to for the Overhead at the end of the year

Using this formula

Ending Overhead =Actual manufacturing overhead -Applied overhead

Let plug in the formula

Ending overhead =$540,708-$539,970

Ending overhead=$738 Under applied

Therefore the Overhead at the end of the year will be $738 Under applied due to the debit balance.