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John has applied overhead of $80,000 and actual overhead of $70,600 for the month of November. He applies overhead based on direct labor hours, which amounts to 10,000 hours for the month. The overhead for the year was estimated to be $1,120,000.

How many direct labor hours were estimated for the year?

A. 500,000
B. 140,000
C. 225,200
D. 150,000

Answer :

The labor hours were estimated for the year were 140,000.

Step 1

applied overhead =$80,000

hours = 10,000

⇒ rate =80,000/10,000

⇒8

Step 2

labor hours were estimated= $1,120,000/8

⇒140,000

The labor hours were estimated for the year were 140,000

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