Question

Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $305,040. At the end of the year, actual direct labor-hours for the year were 16,800 hours, manufacturing overhead for the year was underapplied by $16,800, and the actual manufacturing overhead was $299,040. The predetermined overhead rate for the year must have been:

$17.46 per direct labor-hour

$17.74 per direct labor-hour

$15.93 per direct labor-hour

$16.80 per direct labor-hour

Answer 1

The correct answer is D.

Step-by-step explanation:

Giving the following information:

Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $305,040. At the end of the year, actual direct labor-hours for the year were 16,800 hours, manufacturing overhead for the year was underapplied by $16,800, and the actual manufacturing overhead was $299,040.

under allocation= real MOH - allocated MOH

16,800= 299,040 - allocated MOH

282,240= allocated MOH

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

282,240= Estimated manufacturing overhead rate*16,800

16.8=Estimated manufacturing overhead rate