Answer:
$17,500
Explanation:
Given that,
Actual factory overhead for the year = $1,375,000
Estimated overhead = $1,250,000
Estimated machine hour = 50,000
Total machine hours for the year = 54,300
Predetermined rate per hour:
= Estimated overhead ÷ Estimated machine hour
= $1,250,000 ÷ 50,000
= $25 per hour
Applied overhead:
= Predetermined rate per hour × Total machine hours
= $25 × 54,300
= $1,357,500
Therefore, the under-applied amount for the year:
= Actual factory overhead - Applied overhead
= $1,375,000 - $1,357,500
= $17,500
