Cribb Corporation:

Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 15,200 hours and the total estimated manufacturing overhead was $351,120. At the end of the year, actual direct labor-hours for the year were 14,700 hours and the actual manufacturing overhead for the year was $335,050. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)

  • $4,520 underapplied
  • $9,520 underapplied
  • $4,520 overapplied
  • $9,520 overapplied

Answer: $4,520 overapplied

Rationale:

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base
= $351,120 ÷ 15,200 direct labor-hours
= $23.10 per direct labor-hour

Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
= $23.10 per direct labor-hour × 14,700 direct labor-hours

= $339,570

(Visited 296 times, 1 visits today)