Sawyer Manufacturing Corporation uses a predetermined overhead rate based on dir
ID: 2418794 • Letter: S
Question
Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 59,000 actual direct labor-hours and incurred $1,064,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 56,000 direct labor-hours during the year and incur $1,008,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:
overapplied by $2,000
underapplied by $54,000
underapplied by $2,000
overapplied by $54,000
Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 59,000 actual direct labor-hours and incurred $1,064,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 56,000 direct labor-hours during the year and incur $1,008,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:
Explanation / Answer
Overapplied by $2,000
=($1,064,00/59,000-$1,008,000/56,000)*59,000