At the Beginning of the Year, Manufacturing Overhead for the Year

question 49

Multiple Choice

At the beginning of the year, manufacturing overhead for the year was estimated to be $994,125. At the end of the year, actual direct labor-hours for the year were 36,370 hours, the actual manufacturing overhead for the year was $940,000, and manufacturing overhead for the year was overapplied by $60,175. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: (Do not round intermediate calculations.)

• A) 34,182 direct labor-hours
• B) 36,150 direct labor-hours
• C) 36,370 direct labor-hours
• D) 31,994 direct labor-hours

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Definitions:

Declared Bankrupt

The legal status of an individual or entity that cannot repay the debts they owe to creditors, formally recognized by a court.

Capacity To Contract

The legal ability of a person to enter into a binding contract, typically requiring that the individual is of a certain age and sound mind.

Necessaries

Goods or services that are essential for someone’s maintenance and welfare according to their status in life and their requirements at the time of contract.

Credit

The granting of money or something of value with the expectation of repayment, or the reputation for solvency and reliability that allows an entity to borrow.