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XYZ industries applies overhead based on direct labor cost. The following information was available for the...

XYZ industries applies overhead based on direct labor cost. The following information was available for the last year: Actual manufacturing overhead OMR50,000; Underapplied manufacturing overhead OMR10,400; Actual Prime cost OMR52,000; Actual Direct material cost OMR19,000; Estimated direct labor cost OMR35,000. What was the estimated manufacturing overhead for the year? Select one:

a. None of the answers given

b. OMR39,600

c. OMR46,800

d. OMR44,400

e. OMR42,000

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Homework Answers

Answer #1

Answer :-

Option e) OMR42,000

.

Explanations :-

Applied Overhead = Actual Manufacturing Overhead of Last Year - Under applied Overhead

= OMR50,000 - OMR10,400

Applied Overhead = OMR39,600

.

Actual Direct Labor Cost = Actual Prime cost - Actual material cost

= OMR52,000 - OMR19,000

Actual Direct Labor Cost = OMR33,000

.

Overhead Applying rate = Applied overhead last year / Labour cost of last year

= OMR39,600 / OMR33,000

Overhead Applying rate = 1.20 or 120%

.

Estimated Direct Labor cost = OMR35,000

Estimated Manufacturing Overhead = Estimated Direct Labor cost × Overhead Applying rate

= OMR35,000 × 1.20

Estimated Manufacturing Overhead = OMR42,000

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