At the end of the year, Polk Company's overhead was $10,000 underapplied
At the end of the year, Polk Company's overhead was $10,000 underapplied. At the beginning of the year, the company estimated overhead costs would be $450,000. Actual direct labor hours worked for the year totaled 92,000 and actual overhead was $465,000.
What amount of labor hours did the company estimate at the beginning of the year? Select the closest response.
A. 88,000
B. 82,000
C. 84,000
D. 91,000
E. 90,000
Homework Answers
Underapplied overhead = $10,000
Estimated overhead = $450,000
Actual direct labor hour worked = 92,000
Actual overheads = $465,000
Estimated direct labor hour = ?
Overhead applied = Actual direct labor hour worked x Predetermined overhead rate
= 92,000 x Predetermined overhead rate
Underapplied overhead = Actual overheads - Overhead applied
10,000 = 465,000 - 92,000 x Predetermined overhead rate
92,000 x Predetermined overhead rate = 455,000
Predetermined overhead rate = $4.945 per direct labor hour
Predetermined overhead rate = Estimated overhead/Estimated direct labor hour
4.945 = 450,000/Estimated direct labor hour
Estimated direct labor hour = 91,000
Correct option is (D)
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