Question

At the beginning of the year, manufacturing overhead for the year was estimated to be $859,200. At the end of the year, actual direct labor-hours for the year were 36,300 hours, the actual manufacturing overhead for the year was $830,000, and manufacturing overhead for the year was overapplied by $41,200. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: (Round your intermediate calculations to 2 decimal places.)

Answer 1

estimated direct labor hours= 35,800

Step-by-step explanation:

Giving the following information:

The estimated manufacturing overhead= $859,200

The actual direct labor-hours= 36,300 hours

The actual manufacturing overhead= $830,000

Manufacturing overhead for the year was overapplied by $41,200

To calculate the estimated direct labor-hours, we need to reverse engineer the allocated overhead process.

Under/over applied overhead= real overhead - allocated overhead

-41,200= 830,000 - allocated overhead

allocated overhead= 871,200

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

871,200= Estimated manufacturing overhead rate*36,300

Estimated manufacturing overhead rate= $24 per direct labor hour

Finally, the estimated direct labor hours:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

24= 859,200/estimated direct labor hours

estimated direct labor hours= 859,200/24

estimated direct labor hours= 35,800