Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The company allocates manufacturing overhead based on machine hours. Cedar River expects to incur $250,000 of manufacturing overhead costs and to use 10,000 machine hours during the fiscal year 2018.
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First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 250,000/10,000= $25 per machine hours.
To allocate the overhead we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Suppose 8,000 machine hours were necessary:
Allocated MOH= 25*8,000= $200,000
