Question

Mackinaw Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 20,400 actual direct labor-hours and incurred $145,600 of actual manufacturing overhead cost. They had estimated at the beginning of the year that 17,700 direct labor-hours would be worked and $141,600 of manufacturing overhead costs incurred. The Corporation had calculated a predetermined overhead rate of $8 per direct labor-hour. The Corporation's manufacturing overhead for the year was: Multiple Choice overapplied by $4,000 underapplied by $4,000 overapplied by $17,600 underapplied by $17,600

Answer 1

Mackinaw Manufacturing Corporation

The Corporation's manufacturing overhead for the year was:

underapplied by $4,000

Step-by-step explanation:

a) Data and Calculations:

Last year's:

Actual direct labor-hours = 20,400 hours

Actual manufacturing overhead = $145,600

Estimated direct labor-hours = 17,700 hours

Estimated manufacturing overhead = $141,600

Predetermined overhead rate = $8 per direct labor-hour

Underapplied overhead = Actual overhead Minus Estimated overhead

= $145,600 - $141,600

= $4,000