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    Manufacturing Overhead - Silo's Company

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    Silo's Company uses a predeterminated overhead rate based on labor-hours to apply manufacturing overhead to jobs. Estimate and actual data for direct labor and manufacturing overhead for last year are as follows:

    Estimated Actual
    Direct Labor Hours.............600,000 550,000
    Manufacturing overhead .......$720,000 $680,000

    The manufacturing overhead for Silo's Company for last year was:

    a) underapplied by $40,000
    b) overapplied by $20,000
    c) overapplied by $40,000
    d) underapplied by $20,000

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    Solution Preview

    As the estimated overhead are more than the actual overhead, thus there is over applied overhead by 720000-680000= $40000
    Hence answer is:
    c) ...

    Solution Summary

    A choice is picked with brief explanation for the manufacturing overhead of a company.