Question

A company estimated 100,000 direct labor hours and $815,000 in overhead. The actual overhead was $836,500,...

A company estimated 100,000 direct labor hours and $815,000 in overhead. The actual overhead was $836,500, and there were 90,000 direct labor hours. Base on the predetermined overhead rate, how much of the overhead was underestimated? [Hint: round your answer in 2 decimal places]

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Answer #1

Overhead costs are allocated on basis of either labours or machine hours or another base

Here in the problem labour hours are provided so that we have to calculate the overhead rate based on labour hours

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