At the beginning of the year, manufacturing overhead for the year was estimated to be $275,280. At the end of the year, actual direct labor-hours for the year were 22,900 hours, the actual manufacturing overhead for the year was $265,400, and manufacturing overhead for the year was overapplied by $18,560. 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: (Round your intermediate calculations to 2 decimal places.)

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-05-13T04:00:55+02:00

Answer:

estimated direct labor hours= 22,200 hours

Explanation:

Giving the following information:

Estimated overhead= $275,280.

Actual direct labor-hours for the year were 22,900 hours

Actual manufacturing overhead= $265,400

Manufacturing overhead for the year was overapplied by $18,560

We need to reverse engineer the manufacturing overhead application process for the period.

Under/over applied overhead= real overhead - allocated overhead

If overhead was overapplied, the real overhead was lower than applied.

-18,560= 265,400 - allocated overhead

allocated overhead= $283,960

Now, we need to determine the estimated overhead application rate:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

283,960= Estimated manufacturing overhead rate*22,900

$12.4=Estimated manufacturing overhead rate

Finally, we can specify the estimated direct labor hours:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

12.4= 275,280/estimated direct labor hours

estimated direct labor hours= 22,200 hours