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In: Accounting

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the...

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $327,691 and direct labor hours would be 46,813. Actual factory overhead costs incurred were $344,427, and actual direct labor hours were 51,254. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year?

a.$31,087 underapplied

b.$14,351 overapplied

c.$14,351 underapplied

d.$358,778 overapplied

Solutions

Expert Solution

  • All working forms part of the answer
  • Option ‘B’ $ 14,351 Over Applied

A

Estimated Overheads

$          327,691.00

B

Estimated direct labor hours

46,813

C = A/B

Overhead rate to be applied

$                       7.00

D

Actual direct labor hours

$            51,254.00

E = C x D

Overheads applied

$          358,778.00

F

Actual Overheads

$          344,427.00

Overheads are

OVER APPLIED, because Applied Overheads are MORE than Actual Overheads

G = E - F

Ove rApplied by

$            14,351.00

Correct Answer

Option 'B' $ 14,351 Over Applied

ekkarill92 answered 2 years ago
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