Question

Cavy Company estimates that the factory overhead for the following year will be $1,128,900. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 21,300 hours. The machine hours for the month of April for all of the jobs were 2,940. If the actual factory overhead for April totaled $159,092, determine the over- or underapplied amount for the month. Enter the amount as a positive number.

Answer 1

Answer:

Under applied overhead for the month is $3,272

Explanation:

Predetermined Overhead Rate = Estimated factory Overhead / Estimated Machine hours

Predetermined Overhead Rate = $1,128,900 / 21300

Predetermined Overhead Rate = $53 per machine hour

Applied factory overhead = 2,940 x 53

Applied factory overhead = $155,820

Under applied overhead = 159,092 - 155,820

Under applied overhead = $3,272