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Cabaret Corporation had actual manufacturing overhead costs for the most recent year of $27,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.75 per direct labour hour. Direct labour cost is $18 per hour. At the end of the year, Cabaret Corporation found it had overallocated manufacturing overhead by $1,000.
-How many direct labour hours were worked in total during the year at Cabaret Corporation?

Question

Quizplus · Accepted Answer

To find the total direct labour hours, first calculate the allocated overhead: $27,500 (actual overhead) - $1,000 (overallocated) = $26,500 (allocated overhead). Then, divide the allocated overhead by the predetermined rate: $26,500 / $1.75 = 15,143 direct labour hours.

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