Question

At the beginning of the year, Monroe Company estimates annual overhead costs to be $2400000 and that 300000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315000 hours is _____.

Answer 1

Answer:

Allocated MOH= $252,000

Explanation:

Giving the following information:

Estimated overhead= 240,000

Estimated machine hours= 300,000

Actual machine hours for the year were 315000 hours.

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate=  240,000/300,000= $0.8 per machine hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 0.8*315,000= $252,000