Question

Perion Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,200 hours and the total estimated manufacturing overhead was $259,840. At the end of the year, actual direct labor-hours for the year were 10,800 hours and the actual manufacturing overhead for the year was $254,840. Overhead at the end of the year was:

Answer 1

Answer:

$4,280 under applied

Explanation:

Given that;

Estimated direct labor hours = 11,200

Estimated manufacturing overhead = $259,840

Estimated rate per hour = $259,840 ÷ 11,200 = $23.2

Actual labor hours = 10,800

Estimated overhead for actual hours

= 10,800 × $23.2

= $250,560

Actual overheads incurred = $254,840

Hence, actual overheads are under absorbed by

= $254,840 - $250,560

= $4,280