Question

Steph Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,980 hours and the total estimated manufacturing overhead was $540,708. At the end of the year, actual direct labor-hours for the year were 21,950 hours and the actual manufacturing overhead for the year was $540,708. Overhead at the end of the year was:

Answer 1

$738 under applied

Step-by-step explanation:

For computing the overhead at the end of the year first we have to determine the predetermined overhead rate which is shown below:

Predetermined overhead rate is

= $540,708 ÷ 21,980 hours

= $24.6 per hour

Now

Actual overhead applied is

= $24.6 × 21,950

= $539,970

And, the actual overhead is $540,708

So,

Overhead under applied is

= Manufacturing overhead - Actual overhead applied

= $540,708 - $539,970

= $738 under applied