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Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the...

Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $244,200 and 9,200 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $245,000 and actual direct labor-hours were 6,100.

The applied manufacturing overhead for the year was closest to: (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-08-28

Multiple Choice

  • $162,443

  • $161,894

  • $305,366

  • $244,976

Business   Accounting   
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Answer #1
  • Predetermined overhead rate = total estimated overhead ÷ estimated direct labor-hours = $244,200 ÷ 9,200 direct labor-hours = $26.54 per direct labor-hour
  • Applied manufacturing overhead = actual direct labor-hours × predetermined overhead rate = 6,100 direct labor-hours × $26.54 per direct labor-hour = $161,894
  • Applied manufacturing overhead is the amount of overhead allocated to the cost of goods manufactured. Actual overhead cannot be calculated until the end of the production. Therefore, a predetermined overhead rate is used to apply manufacturing overhead.
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