Bayest Manufacturing Corporation uses a predetermined overhe

Bayest Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 56,250 actual direct labor-hours and incurred $362,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 60,100 direct labor-hours during the year and incur $336,560 of manufacturing overhead cost. The Corporation\'s manufacturing overhead cost for the year was:

Solution

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $336560 ÷ 60100 direct labor-hours = $5.6 per direct labor-hour

Overhead over or underapplied

Actual MOH = 362000

Applied MOH = $5.6 x 56250 = $315000

Underapplied MOH = 362000 - 315000 = 47000