Crimp corporation uses direct labor-hours in its predetermined overhead rate. at the beginning of the year, the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000. at the end of the year, actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000. overhead at the end of the year was:

Question

Business

Camila Nichols

5 January, 09:34

Crimp corporation uses direct labor-hours in its predetermined overhead rate. at the beginning of the year, the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000. at the end of the year, actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000. overhead at the end of the year was:

+2

Answers (1)

Know the Answer?

Donovan Schwartz · Answer 1

First of all, the predetermined overhead will be calculated.

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor hour

Predetermined overhead rate = $ 258,000 : 15,000 hours = $ 17.20 per direct labor hour

Actual manufacturing overheads = $ 253,000

Applied manufacturing overheads = Predetermined overhead rate * Actual direct labor hours

Applied manufacturing overheads = $ 17.20 * 13,100 = 225,320

Applied manufacturing overheads are less than actual manufacturing overheads, thus overheads are under applied.

Actual manufacturing overheads - Applied manufacturing overheads = $ 27,680 under applied