Question

Billy Boi 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 $88,480 and 2,800 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $80,160 and actual direct labor-hours were 2,700.
The overhead for the year was _____. (Round your intermediate calculations to 2 decimal places.) Please show the calculations.

Answer 1

Answer:

The correct answer is $5,160.

Explanation:

According to the scenario, the given data are as follows:

Estimated OH = $88,480

Estimated direct labor hour = 2,800 labor hour

So, Estimated OH per labor hour = $88,480 ÷ 2,800 = $31.6 / labor hour

Actual OH = $80,160

Actual Direct labor hour = 2,700 labor hour

Now,  Applied OH = Estimated OH per labor hour × Actual Direct labor hour

= $31.6 × 2700

= $85,320

Since, Applied OH is Greater than Actual OH, it is underapplied OH.

Underapplied OH = Applied OH - Actual OH

= $85,320 - $80,160

= $5,160.

Hence, the underapplied OH for the year was $5,160.

Answer 2

The overhead for the year was $5,160 when the total evaluated overhead of $88,480 and 2,800 estimated direct labor hours.

What is overhead?

Overhead is an expense that refers to the continued expense of operating a business.

Overheads are expenditures that cannot be conveniently traced to or recognized with any special revenue unit.

According to the scenario, the given data are as follows:

Computation of overheads(OH):

It is given that:

Estimated OH = $88,480

Estimated direct labor hour = 2,800 labor hours

Then, estimated OH per labor hour:

$\text{Estimated OH Per Labor Hour}=\dfrac{ \text{Estimated OH}}{\text{Estimated Direct Labor Hour}}\\\\\text{Estimated OH Per Labor Hour}=\dfrac{\ 88,480}{\ 2,800}\\\\\text{Estimated OH Per Labor Hour}=\ 31.6\text {Per Hour}$

Actual OH = $80,160

Actual Direct labor hour = 2,700 labor hours.

Then, Applied OH:

$\text{Applied OH} = \text{Estimated OH Per Labor Hour}\times\text{ Actual Direct labor Hour}\\\\\text{Applied OH} =\ 31.6\times2,700\\\\\text{Applied OH} =\ 85,320$

As we know, when applied OH is greater than actual OH, then it is under applied OH.

Hence, under overhead is:

$\text{Under Applied OH} = \text{Applied OH – Actual OH}\\\\\text{Under Applied OH} = \ 85,320 - \ 80,160\\\\\text{Under Applied OH} =\ 5,160.$

Therefore, the under applied OH for the year was $5,160.

To learn more about the overhead, refer to:

https://brainly.com/question/180050