Lee Corporation uses direct labour-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,140. At the end of the year, actual direct labour-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,060, and the actual manufacturing overhead was $359,140. The predetermined overhead rate for the year must have been closest to:

Question

BlackTom AI · Accepted Answer

Predetermined overhead rate = estimated total manufacturing overhead ÷ estimated direct labour-hours.

Relevant concepts:
- Predetermined overhead rate is set at the start of the year using estimated overhead and estimated allocation base (direct labour-hours).
- Applied overhead during the year = predetermined rate × actual direct labour-hours.
- Overapplied overhead means applied overhead > actual overhead; amount overapplied = applied − actual.

Step-by-step reasoning and calculations:
1. Actual manufacturing overhead for the year = $359,140.
2. Overapplied overhead = $8,060, so applied overhead = actual overhead + overapplied amount:
   Applied overhead = $359,140 + $8,060 = $367,200.
3. Applied overhead also equals predetermined rate × actual direct labour-hours.
   Actual direct labour-hours = 24,000 hours.
4. Predetermined overhead rate = Applied overhead ÷ Actual direct labour-hours:
   Rate = $367,200 ÷ 24,000 hours = $15.30 per direct labour-hour.
5. (Optional check) Using the given estimated overhead $364,140, the implied estimated hours would be $364,140 ÷ $15.30 = 23,800 hours, consistent with a predetermined rate set before actual hours were known.

Why the correct answer is correct:
- The rate of $15.30 per hour yields applied overhead of $15.30 × 24,000 = $367,200, which is exactly $8,060 greater than the actual $359,140 (i.e., overapplied by $8,060), matching the problem statement.

Why the other choices are incorrect:
- $15.43 → applied = $15.43 × 24,000 = $370,320 (overapplied by $11,180, not $8,060).
- $14.96 → applied = $14.96 × 24,000 = $359,040 (underapplied by $100, not overapplied).
- $15.17 → applied = $15.17 × 24,000 = $364,080 (overapplied by $4,940, not $8,060).

Conclusion: The predetermined overhead rate must have been $15.30 per direct labour-hour, which matches the provided answer.

类似问题

Overhead costs are assigned to each product based on ________.

Assigning indirect costs to specific jobs is completed by which of the following?

What is the most practical way of disposing of the over or under applied overhead?

The painting department allocates overhead on the basis of machine hours. In June, estimated overhead was $116,000 and actual overhead was $130,000. The estimated machine hours were 29,000 hours and the actual machine hours were 28,000 hours. Therefore, overhead was:

The formula for Predetermined Overhead Rate includes, Estimated Total Manufacturing Overhead as well as Estimated Total amount of the Allocation Base

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