Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,960 hours and the total estimated manufacturing overhead was $535,824. At the end of the year, actual direct labor-hours for the year were 21,900 hours and the actual manufacturing overhead for the year was $535,824. Overhead at the end of the year was:

Note: Do not round intermediate calculations.

Multiple Choice
$1,514 overapplied
$1,514 underapplied
$1,464 underapplied
$1,464 overapplied

To determine whether the overhead is overapplied or underapplied, we first need to calculate the **predetermined overhead rate** and then compare the applied overhead to the actual overhead.

### Step 1: Calculate the Predetermined Overhead Rate
The formula for the predetermined overhead rate is:
\[
\text{Predetermined Overhead Rate} = \frac{\text{Estimated Total Manufacturing Overhead}}{\text{Estimated Direct Labor-Hours}}
\]
Using the given information:
- Estimated Total Manufacturing Overhead = $535,824
- Estimated Direct Labor-Hours = 21,960 hours

\[
\text{Predetermined Overhead Rate} = \frac{535,824}{21,960} = 24.4 \, \text{per direct labor-hour}
\]

### Step 2: Apply Overhead to Actual Direct Labor-Hours
The formula for applied overhead is:
\[
\text{Applied Overhead} = \text{Predetermined Overhead Rate} \times \text{Actual Direct Labor-Hours}
\]
Using the given actual labor-hours:
- Actual Direct Labor-Hours = 21,900 hours

\[
\text{Applied Overhead} = 24.4 \times 21,900 = 534,360
\]

### Step 3: Compare Applied Overhead to Actual Overhead
The actual manufacturing overhead is given as $535,824. Now, we compare the applied overhead to the actual overhead:
\[
\text{Difference} = \text{Actual Overhead} - \text{Applied Overhead}
\]
\[
\text{Difference} = 535,824 - 534,360 = 1,464
\]

Since the **actual overhead** is **greater** than the **applied overhead**, the overhead is **underapplied**.

### Final Answer:
The overhead at the end of the year was **$1,464 underapplied**.

The correct choice is:
- **$1,464 underapplied**

Would you like further details or have any questions? Here are some related questions:

1. How is overapplied overhead different from underapplied overhead?
2. What are some consequences of underapplied overhead in managerial decision-making?
3. How can a company correct underapplied or overapplied overhead?
4. What is the significance of using direct labor-hours for overhead allocation?
5. How would a change in estimated labor-hours affect the predetermined overhead rate?

**Tip**: Always ensure the estimated costs and labor hours are accurate to avoid significant discrepancies in overhead allocation.

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,960 hours and the total estimated manufacturing overhead was $535,824. At the end of the year, actual direct labor-hours for the year were 21,900 hours and the actual manufacturing overhead for the year was $535,824. Overhead at the end of the year was:

Solve a manufacturing overhead problem for Crich Corporation, which uses direct labor-hours to calculate overhead. Learn how to determine the predetermined overhead rate, apply overhead to actual labor hours, and calculate the underapplied overhead at the end of the year. The final overhead was $1,464 underapplied.

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