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Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year,...

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,800 hours and the total estimated manufacturing overhead was $497,040. At the end of the year, actual direct labor-hours for the year were 21,500 hours and the actual manufacturing overhead for the year was $492,040. Overhead at the end of the year was:

  • $1,840 underapplied

  • $6,840 overapplied

  • $6,840 underapplied

  • $1,840 overapplied

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Answer #2

Correct answer-----------$1,840 underapplied

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(A) Budgeted Factory Overheads $ 497,040
(B) Budgeted Direct labor hour                     21,800
C= (A/B) Predetermined Overhead rate for fixed overheads $                   22.80
(D) Actual Direct labor hour                     21,500
E=(DxC) Overheads Applied $ 490,200
(F) Actual Overheads $ 492,040
G=(F-E) Overheads Underapplied $ 1,840
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