Question

the steps and formula should be same for these two but found different steps applied, so please can you explain a little bit too. thanks

17) Dukes Corporation used a predetermined overhead rate this year of $2 per direct labor-hour, based on an estimate of 20,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred $38,000 Actual direct labor-hours worked 18,500 The overapplied or underapplied manufacturing for the year was: A) $1,000 underapplied B) $1,000 overapplied C) $3,000 underapplied D) $3,000 overapplied 18) Precision Corporation used a predetermined overhead rate last year of $3 per direct labor-hour, based on an estimate of 24,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred $84.000 Actual direct labor-hours worked 27,000 The overapplied or underapplied manufacturing overhead for the year was: A) $3,000 underapplied B) $3,000 overapplied C) $12,000 underapplied D) $12,000 overapplied

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

17)

Overhead applied

= Overhead application Rate x Actual of the basis of application

= Overhead rate based on direct labor hour x Actual direct labor hours worked

= $2 x 18,500

= $37,000

Overhead is under applied if actual overhead incurred is more than overhead applied and if the actual overhead incurred is less than the overhead applied, the overhead is over applied

So, Overhead under / ( Over ) applied

= $38,000 - $37,000

= $1,000 under applied

So, as per above discussion, option A is the correct option