Fulton Corporation uses estimated direct labor hours of 210,000 and estimated manufacturing overhead costs of $840,000 in establishing manufacturing overhead rates.Actual manufacturing overhead was $960,000,and allocated manufacturing overhead was $980,000.What were the number of actual direct hours worked?

Question

Quizplus · Accepted Answer

To find the actual direct hours worked, we need to use the formula: 
Actual Manufacturing Overhead ÷ Manufacturing Overhead Rate = Actual Direct Labor Hours

Manufacturing Overhead Rate = Estimated Manufacturing Overhead Costs ÷ Estimated Direct Labor Hours 
Manufacturing Overhead Rate = $840,000 ÷ 210,000 = $4 per direct labor hour

Using this rate: 
Actual Direct Labor Hours = Actual Manufacturing Overhead ÷ Manufacturing Overhead Rate 
Actual Direct Labor Hours = $960,000 ÷ $4 per direct labor hour = 240,000

Therefore, the answer is B, 245,000, which is the closest answer choice to 240,000.

Fulton Corporation Uses Estimated Direct Labor Hours of 210,000 and Estimated