Answer:
Overhead underapplied = $626,560
Explanation:
Given that,
Forecasted total overhead for the current year = $11,485,000
Estimated machine hours = 153,000
Actual overhead = $7,533,000
Actual machine hours = 92,000 hours
Predetermined Overhead rate:
= Budgeted Overhead Expense ÷ Budgeted Machine Hours
= $11,485,000 ÷ 153,000
= $75.07 per machine hour
Overhead applied:
= Actual machine hours × Predetermined Overhead rate
= 92,000 hours × $75.07 per machine hour
= $6,906,440
Therefore,
Overhead underapplied:
= Actual overhead - Overhead applied
= $7,533,000 - $6,906,440
= $626,560