question archive A manufacturing company applies factory overhead based on direct labor hours
A manufacturing company applies factory overhead based on direct labor hours
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A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year?
$6,000 overapplied
$54,800 overapplied
$6,000 underapplied
$54,800 underapplied
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Answer:
| Estimated Overhead (1) | $360,000 |
| Estimated Direct Labour Hr(2) | 30000 Hr |
| Overhead/Labour hr (1)/(2) | $12/hr |
| Actual Labour Hrs | 36000 Hrs |
| Overhead Absorbed (Actual Lbr hrs* Overhead /hr) | $432,000 |
| Actual Overhead incurred | $377,200 |
| Overhead Absorbed | $432,000 |
| Overabsorbed overhead [O/H absorbed-Actual Overhead] |
$54,800 |
| Answer is $54800 overapplied | |
