Baka 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 $239,700 and 4,700 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $242,000 and actual direct labor-hours were 4,600.The applied manufacturing overhead for the year was closest to:
A) $229,586
B) $234,600
C) $242,006
D) $236,854

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as estimated total overhead divided by estimated direct labor-hours: $239,700 / 4,700 = $51 per direct labor-hour. The applied manufacturing overhead is then calculated by multiplying the predetermined overhead rate by the actual direct labor-hours: $51 * 4,600 = $234,600.

Baka Corporation Applies Manufacturing Overhead on the Basis of Direct