Question

At the beginning of the year, Monroe Company estimates annual overhead costs to be $2,400,000 and that 300,000 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 315,000 hours is:_______.
a. $2,400,000.
b. $2,285,714.
c. $1,680,000.
d. $2,520,000.

Answer 1

Answer:

The amount of overhead applied during the year is $2,400,000

Explanation:

In determining overheads amounts to be included in product costing, a company uses Budgeted overheads.

Budgeted overheads are used rather than actual overheads because of the delays that are made to obtain Actual data for Actual overhead amounts which will delay product costing.

Therefore Using machine hours as a base, the amount of overhead applied during the year is $2,400,000