Question

Bramble Corp. applies overhead on the basis of machine hours.

Answer 1

Answer:

$2,730,000 and $40,000 under applied

Explanation:

For computing the under applied or over applied, first we have to find out the predetermined overhead rate which is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated machine hours)

= ($2,800,000) ÷ (200,000 machine hours)

= $14  

Now the overhead applied is

= Actual machine hours × predetermined overhead rate

= 195,000 × $14

= $2,730,000

Now the over applied or under applied is

= Actual annual overhead cost - applied overhead

= $2,770,000 - $2,730,000

= $40,000 under applied