Carera Corporation uses a predetermined overhead rate of $23.10 per direct labou
ID: 2491021 • Letter: C
Question
Carera Corporation uses a predetermined overhead rate of $23.10 per direct labour-hour. This predetermined rate was based on 12,000 estimated direct labour-hours and $277,200 of estimated total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $266,000 and 12,600 total direct labour-hours during the period.
Determine the amount of manufacturing overhead applied to units of product during the period as well as the amount of over- or underapplied overhead for the period.
Carera Corporation uses a predetermined overhead rate of $23.10 per direct labour-hour. This predetermined rate was based on 12,000 estimated direct labour-hours and $277,200 of estimated total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $266,000 and 12,600 total direct labour-hours during the period.
Explanation / Answer
summarizing initial data
Predetermined Rate = 23.10
Pre determined Direct labor hours = 12000
Estimated total manufacturing overhead = Labor hours x rate
= 23.10 x 12000
= 277200
Now , Manufacturing overhead applied = Actual direct labor hours x pre detremined rate
= 12600 x 23.10
= 291060
Manufacturing overheads are applied or recovered on the basis of actual direct labour hour i.e 12600
Now, In this case actual hours used are more then estimated hours
Overheads are overapplied as
overheads applied - actual overheads
= 291060 - 277200
= 13860