Answer:
The under applied overhead is $17,500
Explanation:
The computation is shown below:
First, Calculate the predetermined overhead rate per hour which equals to
= (Estimated Overhead cost ÷ estimated machine hours)
= ($1,250,000 ÷ 50,000 hours)
= $25 per hour
So, the applied overhead equals to
= Predetermined overhead rate per hour × actual machine hours
= $25 per hour × 54,300 hours
= $1,357,500
So, the over/under applied overhead equals to
= Applied overhead - actual overhead
= $1,357,500 - $1,375,000
= $17,500 under applied
