A company should immediately recognize: any gain when it constructs a piece of equipment at a cost savings. any gain when it mak
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Answer:
overhead rate $4 per machien hour
applied overhead 1,560,000
The overhead was underapplied for 15,000
entry to adjust against COGS
Cost of Goods of sold 15,000 debit
Factory overhead 15,000 credit
Explanation:
we divide the expected overhead over the total amount of budgeted machine hours to determinate the overhead rate:
1,600,000 / 400,000 = $4 per machine hours
Actual machine hours 390,0000
applied overhead:
actual cost driver x rate per driver
390,000 x $4 = 1,560.000 applied overhead
Actual overhead 1,575,000
As aplies is lower, we should adjust for 15,000 difference