Carera Corporation uses a predetermined overhead rate of $23.90 per direct labou
ID: 2491269 • Letter: C
Question
Carera Corporation uses a predetermined overhead rate of $23.90 per direct labour-hour. This predetermined rate was based on 12,800 estimated direct labour-hours and $305,920 of estimated total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $293,040 and 13,400 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 $23.90 per direct labour-hour. This predetermined rate was based on 12,800 estimated direct labour-hours and $305,920 of estimated total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $293,040 and 13,400 total direct labour-hours during the period.
Explanation / Answer
= Applied overhead-Actual over head
= 13,400×$23.90-$293,040
= $27,220
Applied overhead was higher than actual overhead so it is over applied.