Question

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,060 hours and the total estimated manufacturing overhead was $560,324. At the end of the year, actual direct labor-hours for the year were 22,000 hours and the actual manufacturing overhead for the year was $560,324. Overhead at the end of the year was: (Do not round intermediate calculations.)

Answer 1

$1,524 underapplied

Step-by-step explanation:

The computation of the overhead for the year is shown below:

Predetermined overhead rate is

= $560,324 ÷ 22,060 hours

= $25.40 per hour

Now Actual overhead applied is

= $25.40 × 22,000 hours

= $558,800

Overhead underapplied = Manufacturing overhead - Actual overhead applied

= $560,324 - $558,800

= $1,524 underapplied