Question

AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.

Answer 1

Estimate of actual activity in direct labor hours was:

$=\frac{25750-1500}{1.25}=19400$