Forsyth Company uses estimated direct labor hours of 175,000 and estimated manufacturing overhead costs of $350,000 in establishing its 2014 predetermined overhead allocation rate. Actual results showed: $$\begin{array} { | l | l | }
\hline \text { Actual manufacturing overhead } & \$ 346,500 \
\hline \text { Allocated manufacturing overhead } & \$ 320,000 \
\hline
\end{array}$$ The number of direct labor hours worked during the period was:

Question

Forsyth Company uses estimated direct labor hours of 175,000 and estimated manufacturing overhead costs of $350,000 in establishing its 2014 predetermined overhead allocation rate. Actual results showed: $$\begin{array} { | l | l | } 
\hline \text { Actual manufacturing overhead } & \$ 346,500 \
\hline \text { Allocated manufacturing overhead } & \$ 320,000 \
\hline
\end{array}$$ The number of direct labor hours worked during the period was:

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as estimated overhead costs divided by estimated direct labor hours, which is $350,000 / 175,000 = $2 per hour. The allocated overhead is $320,000, so the actual direct labor hours worked is $320,000 / $2 = 160,000 hours.

Forsyth Company Uses Estimated Direct Labor Hours of 175,000 and Estimated