Question

At the beginning of the year, Vaughn Manufacturing 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 335000 hours is:

Answer 1

Answer:

The amount of overhead applied during the year is $2,680,000

Explanation:

For computing the amount of overhead applied, the following computations are required which is shown below:

1. Compute the overhead cost per machine hour:

The formula is shown below:

= Annual overhead cost ÷ machine hours

= $2,400,000 ÷ 300,000

= $8

Now the amount of overhead applied equals to

= Actual machine-hours × overhead cost per machine hour

= 335,000 hours × $8

= $2,680,000