Question

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,200 hours and the total estimated manufacturing overhead was $594,960. At the end of the year, actual direct labor-hours for the year were 22,150 hours and the actual manufacturing overhead for the year was $594,960. Overhead at the end of the year was: Multiple Choice $1,390 underapplied $1,340 overapplied $1,340 underapplied $1,390 overapplied

Answer 1

Overhead under applied is =$1340 under applied

so correct option is $1,340 underapplied

Step-by-step explanation:

given data

direct labor-hours = 22,200 hours

manufacturing overhead = $594,960

actual direct labor-hours = 22,150 hours

actual manufacturing overhead = $594,960

to find out

Overhead at the end of the year

solution

we find here first Predetermined overhead rate that is

Predetermined overhead rate =
`(594960)/(22200)`

Predetermined overhead rate = 26.8 per hour

so

Actual overhead applied = 26.8 × 22150 hours

Actual overhead applied = $ 593620

so that

Overhead under applied is = Manufacturing overhead - Actual overhead applied .....................1

Overhead under applied is = 594960 - 593620

Overhead under applied is =$1340 under applied

so correct option is $1,340 underapplied