At the beginning of the year, manufacturing overhead for the year was estimated to be $916,725. At the end of the year, actual direct labor-hours for the year were 36,330 hours, the actual manufacturing overhead for the year was $880,000, and manufacturing overhead for the year was overapplied by $46,415. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

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Business

Madilynn Trevino

18 October, 00:04

At the beginning of the year, manufacturing overhead for the year was estimated to be $916,725. At the end of the year, actual direct labor-hours for the year were 36,330 hours, the actual manufacturing overhead for the year was $880,000, and manufacturing overhead for the year was overapplied by $46,415. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

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Bridger Williamson · Answer 1

35,950

Explanation:

The calculation of Estimated direct labor hours is shown below:-

Manufacturing overhead applied = Actual OH + Overapplied OH

= $880,000 + $46,415

= $926,415

Manufacturing overhead applied = Predetermined overhead rate * Actual direct labor hours

Predetermined overhead rate = Manufacturing overhead applied : Actual direct labor hours

= $926,415 : 36,330

= 25.5

Predetermined overhead rate = Estimated total manufacturing OH * Estimated direct labor hours

Estimated direct labor hours = Estimated total manufacturing OH : Predetermined overhead rate

= $916,725 : 25.5

= 35,950

Therefore we have applied the above formula.