Question

Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 57,000 actual direct labor-hours and incurred $345,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 55,000 direct labor-hours during the year and incur $330,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

Answer 1

Underapplied by $3,000

Step-by-step explanation:

Calculation for what The Corporation's manufacturing overhead cost for the year was:

First step is to calculate the Predetermined Overhead rate

Predetermined Overhead rate=( $ 330,000/ 55,000)

Predetermined Overhead rate= $ 6 per labor hour

Now let calculate the Manufacturing overhead cost

Manufacturing overhead cost= (6 x 57 000)-$345,000

Manufacturing overhead cost=$342,000-$345,000

Manufacturing overhead cost=Underapplied by $3,000

Therefore The Corporation's manufacturing overhead cost for the year was:underapplied by $3,000