Question

Before the year began, Venus Manufacturing estimated that manufacturing overhead for the year would be $175,100 and that 25,600 direct labor hours would be worked. Actual results for the year included the following: Actual manufacturing overhead cost $182,900​ Actual direct labor hours 20,500If the company allocates manufacturing overhead based on direct labor hours, the manufacturing overhead for the year would have been (Round intermediary calculations to the nearest cent.)

Answer 1

$42,680 under applied

Step-by-step explanation:

The computation is shown below:

First, Calculate the predetermined overhead rate per hour which equals to

= (Estimated Overhead cost ÷ estimated machine hours)

= ($175,100 ÷ 25,600 hours)

= $6.84 per hour

So, the applied overhead equals to

= Predetermined overhead rate per hour × actual machine hours

= $6.84 per hour × 20,500 hours

= $140,220

So, the over/under applied overhead equals to

= Applied overhead - actual overhead

= $140,220 - $182,900

= $42,680 under applied