Question

Cannon cannery, inc. estimated its factory overhead at $510,000 for 2008, based on a normal capacity of 100,000 direct manufacturing labor hours. standard direct manufacturing labor hours for the year totaled 105,000, while the factory overhead control account at the end of the year showed a balance of $540,000. how much was the underapplied factory overhead for 2008?

Answer 1

Predetermined oH rate is
510,000÷100,000=5.1

Manufacturing overhead applied
5.1×105,000=535,500

Manufacturing OH underapplied
540,000−535,500=4,500