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14 June, 07:32

Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 17,500 hours. At the end of the year, actual direct labor-hours for the year were 16,000 hours, the actual manufacturing overhead for the year was $233,000, and manufacturing overhead for the year was underapplied by $15,400. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

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  1. 14 June, 08:53
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    238,000 expected overhead

    Explanation:

    actual overhead - applied overhead = under if >0 or over if <0

    233,000 - applied overhead = 15,400

    233,000 - 15,400 = 217,600 applpied overhead

    actual hours x rate = applied overhead

    16,000 x rate = 217,600

    rate = 13.6

    expected overhead/cost driver = rate

    expected overhead / 17,500 = 13.6

    13.6 x 17,500 = expected overhead

    238,000 expected overhead
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