Question

At the beginning of the year, a company predicts total overhead costs of $690,900. The company applies overhead using machine hours and estimates it will use 1,470 machine hours during the year. What amount of overhead should be applied to Job 65A if that job uses 20 machine hours during January

Answer 1

Answer:

$9,400

Explanation:

We know,

predetermined overhead rate for machine hour = $\frac{total overhead cost}{total machine hour}$

Given,

Total overhead cost = $690,900

Total machine hours = 1,470

Putting the values into the formula, we can get

predetermined overhead rate for machine hour = $\frac{690,900}{1,470}$

predetermined overhead rate for machine hour = $470

When we use a separate job, the overhead cost will be = predetermined overhead rate × total hours used by the job.

The amount of overhead should be applied to Job 65A if that job uses 20 machine hours during January  = 20 hours × $470 = $9,400