Golden Corporation uses direct labor-hours in its predetermined overhead rate. A

Question

Golden Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,700 hours. At the end of the year, actual direct labor-hours for the year were 21,500 hours, the actual manufacturing overhead for the year was $557,740, and manufacturing overhead for the year was underapplied by $24,540. The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

$552,520.

$583,366.

$533,200.

$562,960.

Explanation / Answer

Actual manufacturing overhead 557,740 manufacturing overhead under applied -24,540 Manufacturing overhead applied 533,200 Applied manufacturing overhead = overhead rate * actual hrs 533,200                                             = x *21500 x                                                           = 533200/21500 24.8 predetermined overhead rate             = estimated MOH/estimated direct labor hrs 24.8                                      = x/22700 x                                            = 24.8*22700 562960 answer

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