Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,900 hours and the total estimated manufacturing overhead was $521,220. At the end of the year, actual direct labor-hours for the year were 21,750 hours and the actual manufacturing overhead for the year was $521,220. Overhead at the end of the year was:

Question

Business

Kash Jacobs

15 July, 02:25

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,900 hours and the total estimated manufacturing overhead was $521,220. At the end of the year, actual direct labor-hours for the year were 21,750 hours and the actual manufacturing overhead for the year was $521,220. Overhead at the end of the year was:

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Rex Carter · Answer 1

Overhead at the end of the year was $3,570 under-applied

Explanation:

For computing the ended overhead amount, first, we have to compute the predetermined overhead rate. The formula is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours)

= $521,220 : 21,900 hours

= $23.8

Now we have to find the actual overhead which equals to

= Actual direct labor-hours * predetermined overhead rate

= 21,750 hours * $23.8

= $517,650

So, the ending overhead equals to

= Actual manufacturing overhead - actual overhead

= $521,220 - $517,650

= $3,570 under-applied