College

We appreciate your visit to Crich Corporation uses direct labor hours in its predetermined overhead rate At the beginning of the year the estimated direct labor hours were 21 940. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,940 hours, and the total estimated manufacturing overhead was $530,948. At the end of the year, actual direct labor-hours were 21,850 hours, and the actual manufacturing overhead was $530,948.

Overhead at the end of the year was: (Do not round intermediate calculations.)

Multiple Choice
A. $2,228 underapplied
B. $2,228 overapplied
C. $2,178 overapplied
D. $2,178 underapplied

Answer :

By calculating the predetermined overhead rate and applying it to the actual direct labor-hours, Crich Corporation's manufacturing overhead is determined to be underapplied by $2,178 at the end of the year.

The question is asking for the determination of whether Crich Corporation's manufacturing overhead is underapplied or overapplied at the end of the year, based on actual and estimated direct labor-hours and overhead costs.

The predetermined overhead rate is calculated at the beginning of the year by dividing the total estimated manufacturing overhead by the estimated direct labor-hours:


$530,948 / 21,940 hours = $24.20 per direct labor-hour.


The overhead applied to production during the year is then found by multiplying the actual direct labor-hours by the predetermined overhead rate:

$24.20 per direct labor-hour x 21,850 actual labor-hours = $528,770 of overhead applied.


Since the actual manufacturing overhead incurred was $530,948, we subtract the applied overhead to determine if the overhead is underapplied or overapplied:


$530,948 actual overhead - $528,770 applied overhead = $2,178. The overhead is underapplied by $2,178.

Thanks for taking the time to read Crich Corporation uses direct labor hours in its predetermined overhead rate At the beginning of the year the estimated direct labor hours were 21 940. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

Rewritten by : Barada