Question

Fox Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the period, the Corporation estimated manufacturing overhead would be $18,000 and direct labor-hours would be 15,000. The actual figures were $19,500 for manufacturing overhead and 16,000 direct labor-hours. The cost records for the period will show:

Answer 1

Answer:

See below

Explanation:

Given the information above, we will calculate the predetermined overhead rate first.

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor

= $18,000 / 15,000

= $1.2

Then,

Manufacturing overhead = Predetermined overhead rate × Actual direct labor hours

= $1.2 × 16,000

= $19,200

Then,

Cost records for the period = Manufacturing overhead - Actual manufacturing overhead

= $19,200 - $19,500

= $300 over applied