Question

Coug Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. Is the manufacturing overhead overapplied or underapplied

Answer 1

$18,890 over applied

Step-by-step explanation:

For computing the manufacturing overhead under applied or over applied first we have to determine the predetermined overhead rate which is shown below:

Predetermined overhead rate = Estimated total fixed manufacturing overhead ÷ estimated direct labor hours

= $121,000 ÷ 10,000 hours

= $12.1

Now the applied overhead is

= 10,900 direct labor hours × $12.1

= $131,890

And, the actual total fixed manufacturing overhead is $113,000

So, the over applied overhead is

= $131,890 - $113,000

= $18,890 over applied