Baker Corporation applies manufacturing overhead on the basis of direct labor-ho
ID: 2724986 • Letter: B
Question
Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $97,650 and 3,100 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $99,850 and actual direct labor-hours were 2,850.
Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $97,650 and 3,100 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $99,850 and actual direct labor-hours were 2,850.
Explanation / Answer
Predetermined overhead rate = 97650 / 3100 = 31.5
The applied manufacturing overhead for the year closest to
Actual machine hours 2850 * 31.5 = 89775.