Bravo Company uses a predetermined overhead rate to apply manufacturing overhead to production. The rate is based on direct labor hours. Beginning of the year estimates for the year just ended were as follows:
|
Estimated manufacturing overhead
|
$240,000
|
|
Estimated direct labor hours
|
40,000
|
During the year, Bravo used a total of 37,000 direct labor hours. At the end of the year, Bravos records revealed the following information:
|
Raw materials inventory
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$ 35,000
|
|
Work in process inventory
|
60,000
|
|
Finished goods inventory
|
105,000
|
|
Cost of goods sold
|
400,000
|
|
Manufacturing overhead costs incurred
|
210,000
|
- Compute the predetermined overhead rate for the year.
- Determine the amount of overhead applied to production during the year.
- the amount of underapplied or overapplied manufacturing overhead for the year