Question

Likes Incorporated makes a single product—a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted manufacturing overhead $ 495,040 Budgeted production (a) 35,000 units Standard hours per unit (b) 1.70 machine-hours Budgeted hours (a) × (b) 59,500 machine-hours Applying Overhead: Actual production (a) 30,000 units Standard hours per unit (b) 1.70 machine-hours Standard hours allowed for the actual production (a) × (b) 51,000 machine-hours Total actual manufacturing overhead $ 498,000 Actual hours 52,000 machine-hours The total amount of manufacturing overhead applied is closest to:

Answer 1

Answer:

Applied overhead = $424,320

Explanation:

Overheads are applied using the predetermined overhead absorption rate (POAR).

The applied overhead = POAR × standard machine hours allowed for actual actual output.

POAR = Budgeted overheads/Budgeted machine hours

OAR=  $ 495,040 /59,500

        =$8.32

Overhead applied = 8.32  × 30,000× 1,70= 424,320

Applied overhead = $424,320