Question

Krier Corporation uses a predetermined overhead rate that was based on estimated manufacturing overhead of $738,000 and 30,000 direct labor-hours for the period. The company incurred actual manufacturing overhead of $792,000 and 31,500 total direct labor-hours during the period. the manufacturing overhead for the period was

Answer 1

Answer:

$17,100 underapplied

Explanation:

The computation of the manufacturing overhead is shown below:

Predetermined overhead rate is

= Estimated manufacturing overhead ÷ Estimated direct labor hours    

= $738,000 ÷ 30000

= $24.6 per direct labor hour      

now

Manufacturing overhead applied is

= Actual direct labor hours  × Predetermined overhead rate

= 31500 × 24.6

= $774,900  

Now  

Underapplied manufacturing overhead is

= $792,000 - $774,900

= $17,100 underapplied