Daguio Corporation Uses Direct Labor-Hours in Its Predetermined Overhead Rate

question 33

Multiple Choice

Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $224,580. At the end of the year, actual direct labor-hours for the year were 18,200 hours, manufacturing overhead for the year was underapplied by $12,100, and the actual manufacturing overhead was $219,580. The predetermined overhead rate for the year must have been closest to:

• A)$11.40
• B)$12.34
• C)$12.06
• D)$10.53

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Definitions:

Depreciation

The methodical distribution of a physical asset's cost across its lifespan.

Manufacturing Equipment

Assets used in the process of producing goods, including machinery, tools, and other apparatus necessary for the manufacturing process.

Raw Materials Inventory

The total cost of all component materials currently in stock that have not yet been used in work-in-process or finished goods production.

Overapplied

Refers to a situation where the allocated costs exceed the actual overhead expenses incurred.