Question

At the beginning of the year, manufacturing overhead for the year was estimated to be $897,500....

At the beginning of the year, manufacturing overhead for the year was estimated to be $897,500. At the end of the year, actual direct labor-hours for the year were 36,320 hours, the actual manufacturing overhead for the year was $860,000, and manufacturing overhead for the year was overapplied by $48,000. 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: (Do not round intermediate calculation.)

Multiple Choice

  • 35,900 direct labor-hours

  • 32,480 direct labor-hours

  • 36,320 direct labor-hours

  • 34,400 direct labor-hours

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Answer #1
35,900 direct labor-hours
Manufacturing overhead applied = Actual overhead + Overapplied overhead
= $860,000 + $48,000
= $908,000
Manufacturing overhead applied = Predetermined overhead rate x Actual direct labor-hours
Predetermined overhead rate = Manufacturing overhead applied / Actual direct labor-hours
$908,000 / 36,320
$25 per direct labor-hour
Predetermined overhead rate = Estimated total manufacturing overhead / Estimated direct labor-hours
Estimated direct labor-hours = Estimated total manufacturing overhead / Predetermined overhead rate
$897,500 / $25
35,900 direct labor- hours
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