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3 years ago

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A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that fa

ctory overhead costs would be $469,930 and direct labor hours would be 46,993. Actual factory overhead costs incurred were $523,248, and actual direct labor hours were 54,505. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year

1 answer:

daser333 [38]3 years ago

7 0

Answer:

Overapplied overhead= $21,802

Explanation:

<u>First, we need to calculate the predetermined overhead rate:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 469,930 / 46,993

Predetermined manufacturing overhead rate= $10 per direct labor hour

<u>Now, we can allocate overhead:</u>

<u></u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 10*54,505

Allocated MOH= $545,050

<u>Finally, the over/under allocation:</u>

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 523,248 - 545,050

Overapplied overhead= $21,802

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