Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct labour-hour. This
predetermined rate was based on 16,000 estimated direct labour-hours and $342,400 of estimated total manufacturing overhead.
The company incurred actual total manufacturing overhead costs of $345,000 and 16,500
total direct labour-hours during the period. There were no beginning inventories, and all
goods produced in the period were shipped out to customers before period-end.
Required:
1. Determine the amount of underapplied or overapplied manufacturing overhead for the
period.
2. What is the effect on gross margin for the period?

Question

Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct labour-hour. This 
predetermined rate was based on 16,000 estimated direct labour-hours and $342,400 of esti￾mated total manufacturing overhead.
 The company incurred actual total manufacturing overhead costs of $345,000 and 16,500 
total direct labour-hours during the period. There were no beginning inventories, and all 
goods produced in the period were shipped out to customers before period-end.
Required:
1. Determine the amount of underapplied or overapplied manufacturing overhead for the 
period.
2. What is the effect on gross margin for the period?

Vocaloid · Answer

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