1.
Dowan Company uses a predetermined overhead rate based on direct labor-hours to apply
manufacturing overhead to jobs. Last year Dowan Company incurred $185,400 in actual
manufacturing overhead cost. Overhead was underapplied by $17,400 for the year. If the
predetermined overhead rate is $6.00 per direct labor-hour, how many hours did the company
work during the year?
29,400 hours
33,800 hours
28,000 hours
30,900 hours
Dowan Company uses a predetermined overhead rate based on direct labor-hours to apply
manufacturing overhead to jobs. Last year Dowan Company incurred $185,400 in actual
manufacturing overhead cost. Overhead was underapplied by $17,400 for the year. If the
predetermined overhead rate is $6.00 per direct labor-hour, how many hours did the company
work during the year?
Solution
Worked hours = ($185,400-$17,400)÷$6 = 28,000
Company worked for 28,000 hours