Question

Bernson Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:
(A) $25,000
(B) $487,703
(C) $464,120
(D) $492,000

Answer 1

Answer:

(C) $464,120

Explanation:

The computation is shown below:

First, Calculate the predetermined overhead rate per hour which equals to

=  (Estimated Overhead cost ÷ estimated machine hours)  

= ($492,000 ÷ 30,000 hours)

= $16.4 per hour

So, the applied overhead equals to

=  Predetermined overhead rate per hour × actual machine hours

= $16.4 per hour × 28,300 hours

= $464,120