Question

cool hall inc. manufacturing overhead for the year was estimated to be $702,540. if the predetermined overhead rate is based on direct labor hours, then the estimated direct labor hours of the predetermined overhead rate is based on direct labor-hours, than the estimated direct labor hours of the beginning of the year used in the predetermined overhead rate must have been

Answer 1

c. 31,504 direct labor hour

Step-by-step explanation:

Note: The full question is attached as picture below

Manufacturing overhead applied = Actual Manufacturing overhead + Over-applied overhead

Manufacturing overhead applied = 697,450 + 40,680

Manufacturing overhead applied = 738,130

Manufacturing overhead applied = Predetermined overhead rate * Actual direct labor hour

738,130 = Predetermined overhead rate * 33,100 direct labor hour

Predetermined overhead rate = $738,130 / 33,100 direct labor hour

Predetermined overhead rate = $22.30 direct labor hour

Estimated direct labor hour = Estimated Manufacturing overhead / Predetermined overhead rate

Estimated direct labor hour = $702,540 / $22.30 direct labor hour

Estimated direct labor hour = 31,504 direct labor hour

So, the estimated direct labor hours at the beginning of the year used in the predetermined overhead rate must have been 31,504 direct labor hour.