Question

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,880 hours and the total estimated manufacturing overhead was $516,368. At the end of the year, actual direct labor-hours for the year were 21,700 hours and the actual manufacturing overhead for the year was $516,368. Overhead at the end of the year was:

Answer 1

$4,248 underapplied

Step-by-step explanation:

The computation of Overhead at the end of the year is shown below:-

Predetermined overhead rate = Actual manufacturing overhead ÷ Estimated Direct labor hours

= $516,368 ÷ 21,880

= 23.6 per hour

Actual overhead applied = Predetermined overhead rate × Actual direct labor-hours

= 23.6 × 21,700

= $512,120

Overhead underapplied = Manufacturing overhead - Actual overhead applied

= $516,368 - $512,120

= $4,248 underapplied