Pinnini Co. uses a predetermined overhead rate based on direct Labour hours to apply manufacturing overhead to jobs. Last year, Pinnini Company incurred £225,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied £14,500 for the year. If the predetermined overhead rate was £5.00 per direct Labour hour, how many hours did the company work during the year
A)45,000 hours
B)47,900 hours
C)42,100 hours
D)44,000 hours

Question

Quizplus · Accepted Answer

The predetermined overhead rate is £5.00 per direct labor hour. The actual overhead was £225,000, but it was overapplied by £14,500, meaning the applied overhead was £225,000 + £14,500 = £239,500. To find the hours worked, divide the applied overhead by the rate: £239,500 / £5.00 per hour = 47,900 hours.