Answer:
1. $14.4 per machine hour
2. $78,000 over-applied
Explanation:
The computation is shown below:
1. Predetermined overhead rate = (Expected overhead for the year) ÷ (practical level of activity)
= $5,702,400 ÷ 396,000 machine hours
= $14.4
b. The overhead variance is
For computing the overhead variance, first we have to determine the applied overhead that is given below
= Actual machine hours × predetermined overhead rate
= 404,000 machine hours × $14.4
= $5,817,600
So, the overhead variance equals to
= Actual manufacturing overhead - actual overhead
= $5,739,600 - $5,817,600
= $78,000 over-applied
