Question

Bradbeer Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 17,500 hours. At the end of the year, actual direct labor-hours for the year were 16,000 hours, the actual manufacturing overhead for the year was $233,000, and manufacturing overhead for the year was underapplied by $15,400. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

Answer 1

238,000 expected overhead

Step-by-step explanation:

actual overhead - applied overhead = under if >0 or over if <0

233,000 - applied overhead = 15,400

233,000 - 15,400 = 217,600 applpied overhead

actual hours x rate = applied overhead

16,000 x rate = 217,600

rate = 13.6

expected overhead/cost driver = rate

expected overhead/ 17,500 = 13.6

13.6 x 17,500 = expected overhead

238,000 expected overhead