Urquhart 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 $100,000 and 3,600 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $105,000 and the actual direct labor-hours were 3,800.
Instructions:
1.) If rounding is required, then round your answer to the nearest whole dollar. Rounding, if applicable, should not be done until a final answer is reached.
2.) Omit the "$" sign in your response. Do not use brackets for negative numbers. Use a minus sign for underapplied amounts and no sign for overapplied amounts.
Overhead for the year was overapplied (+) or underapplied (-) by how much?
i have urqhart as well
To determine the amount of overhead overapplied or underapplied, we need to calculate the predetermined overhead rate and then compare it to the actual manufacturing overhead.
First, let's calculate the predetermined overhead rate:
Predetermined Overhead Rate = Total Estimated Overhead / Estimated Direct Labor-Hours
= $100,000 / 3,600 hours
= $27.78 per direct labor-hour
Next, we calculate the overhead applied based on the actual direct labor-hours:
Overhead Applied = Actual Direct Labor-Hours * Predetermined Overhead Rate
= 3,800 hours * $27.78/hour
= $105,924
Finally, we determine the overapplied or underapplied overhead:
Overapplied or Underapplied Overhead = Actual Manufacturing Overhead - Overhead Applied
= $105,000 - $105,924
= -$924
Therefore, the overhead for the year was underapplied (-) by $924.