Question

Tarot Company has a predetermined overhead rate of $6 per direct labor hour. Last year the company incurred $156,600 of actual manufacturing overhead cost and the account was $12,600 underapplied. How many direct labor hours were worked during the year?

a. 25,000 direct labor hours
b. 28,200 direct labor hours
c. 26,000 direct labor hours
d. 24,000 direct labor hours

Answer 1

The number of direct labor hours worked during the year can be calculated using the formula: Actual Manufacturing Overhead = Predetermined Overhead Rate × Direct Labor Hours.

Thus the correct answer is option c.

Step-by-step explanation:

To find the number of direct labor hours worked during the year, we can use the formula:

Actual Manufacturing Overhead = Predetermined Overhead Rate imes Direct Labor Hours

Given that the Predetermined Overhead Rate is $6 per direct labor hour and the Actual Manufacturing Overhead is $156,600, we can rearrange the formula to find the Direct Labor Hours:

Direct Labor Hours = Actual Manufacturing Overhead / Predetermined Overhead Rate

Substituting in the values, we get:

Direct Labor Hours = $156,600 / $6 = 26,100 hours

Therefore, the correct answer is option c. 26,000 direct labor hours.