Baker Corporation applies manufacturing overhead on the basis of direct labor-ho

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.

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