Dowan Company uses a predetermined overhead rate based on direct labor-hours to

Question

Dowan Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year Dowan Company incurred $187,200 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that manufacturing overhead was overapplied by $12,600 for the year. If the predetermined overhead rate is $6.00 per direct labor-hour, how many hours did the company work during the year?

Select one:

a. 26,000 hours

b. 24,000 hours

c. 31,200 hours

d. 33,200 hours

Explanation / Answer

The correct answer = 33,300 hours. None of the options are correct. Please check figures uploaded.

Calculations:

Total overhead applied = 187200 + 12600 = 199800

Direct labor hours worked = total overhead applied/OH rate per hour = 199800/6 = 33,300 hours

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