Paula purchased a house for $300,000. After providing a 20% down payment, she borrowed the balance from the local savings and lo
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Answer:
Data
Allocation Base Machine Hours
Estimated manufacturing overhead cost $300,000
Estimated total amount of allocation base 75,000 machine hours
Actual manufacturing overhead cost $290,000
Actual total amount of the allocation base 68,000 machine hours
Computation of predetermined overhead rate
Estimated manufacturing overhead cost $300,000
Estimated total amount of allocation base 75,000 machine hours
Predetermined overhead rate $4 per machine hour
= 300,000/75,000
= $4
Computation of underapplied or overapplied manufacturing overhead
Actual manufacturing overhead cost <u> $290,000</u>
Manufacturing overhead cost applied to WIP during the year:
Predetermined overhead rate $4 per machine hour
Actual total amount of allocation base <u> 68,000 </u>machine hours
Manufacturing overhead applied <u> $272,000</u>
= 68,000 * 4 = $272,000
Underapplied (overapplied) manufacturing <u> $18,000 underapplied</u>
overhead
