Question

Crinks Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,200 hours and the total estimated manufacturing overhead was $259,840. At the end of the year, actual direct labor-hours for the year were 10,800 hours and the actual manufacturing overhead for the year was $254,840. Overhead at the end of the year was: A. $4,280 overapplied B. $9,280 overapplied C. $9,280 underapplied D. $4,280 underapplied

Answer 1

D. $4,280 under-applied

Step-by-step explanation:

Provided information,

Estimated direct labor hours = 11,200

Estimated manufacturing overhead = $259,840

Estimated rate per hour =
`(259,840)/(11,200) = 23.2`

Actual labor hours = 10,800

Estimated overhead for actual hours = 10,800
`*` $23.2 = $250,560

Actual overheads incurred = $254,840

Thus actual overheads are under absorbed by $254,840 - $250,560 = $4,280.

Correct option is

D. $4,280 under-applied