Question

At the beginning of the year, manufacturing overhead for the year was estimated to be $859,200. At the end of the year, actual direct labor-hours for the year were 36,300 hours, the actual manufacturing overhead for the year was $830,000, and manufacturing overhead for the year was overapplied by $41,200. 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.)

Answer 1

Let the Estimated Direct labor hours be K

Estimated Manufacturing overheads = $859,200

Actual manufacturing overheads = $830,000

Actual direct labor hours used = 36,300

Over applied manufacturing overheads = $41,200

Predetermined overhead rate = Estimated Manufacturing overheads/Estimated Direct labor hours

= 859,200/K

Overhead applied = Actual direct labor hours used x  Predetermined overhead rate

= 36,300 x 859,200/K

Over applied manufacturing overheads = Applied manufacturing overheads - Actual manufacturing overheads

41,200 = 36,300 x 859,200/K - 830,000

36,300 x 859,200/K = 871,200

859,200/K = 871,200/36,300

859,200/K = 24

K = 35,800

Estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been 35,800