Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $214,890. At the end of the year, actual direct labor-hours for the year were 15,900 hours, manufacturing overhead for the year was underapplied by $16,500, and the actual manufacturing overhead was $208,890. The predetermined overhead rate for the year must have been:
|
$12.76 per direct labor-hour | |
$12.10 per direct labor-hour | |
$13.04 per direct labor-hour | |
$11.23 per direct labor-hour |
Manufacturing overhead applied = Actual overhead − Underapplied overhead
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= $208,890 − $16,500
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= $192,390
|
Predetermined overhead rate = $192,390 ÷ 15,900 direct labor-hours = $12.10 per direct labor-hour |
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