Yista Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The company estimated manufacturing overhead at $510,000 for the year and direct labor-hours at 100,000 hours.Actual manufacturing overhead costs incurred during the year totaled $540,000.Actual direct labor-hours were 105,000.What was the overapplied or underapplied overhead for the year?
A)$30,000 overapplied
B)$30,000 underapplied
C)$4,500 overapplied
D)$4,500 underapplied

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead F1F1F1S1F1F1F10 Estimated total amount of the allocation base
= $510,000 F1F1F1S1F1F1F10 100,000 direct labor-hours
= $5.10 per direct labor-hour
Applied overhead = Predetermined overhead rate F1F1F1S1F1F1F10 Actual direct labor-hours
= $5.10 per direct labor-hour F1F1F1S1F1F1F10 105,000 direct labor-hours
= $535,500
Overapplied/underapplied manufacturing overhead = Actual manufacturing overhead - Applied overhead
= $540,000 - $535,500
= $4,500 Underapplied

Yista Corporation Uses a Predetermined Overhead Rate Based on Direct