Question

Bonita Industries applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period: Estimated annual overhead cost $1700000 Actual annual overhead cost $1675000 Estimated machine hours 500000 Actual machine hours 490000 $1675000 applied and neither under-nor overapplied $1666000 applied and $9000 overapplied $1700000 applied and $9000 overapplied $1666000 applied and $9000 underapplied

Answer 1

Answer:

$1,666,000 applied and $9,000 under-applied.

Explanation:

Given that,

Estimated annual overhead cost = $1,700,000

Actual annual overhead cost = $1,675,000

Estimated machine hours = 500,000

Actual machine hours = 490,000

Predetermined Overhead Rate:

= Estimated annual overhead cost ÷ Estimated machine hours

= $1,700,000 ÷ 500,000

= $3.40 per machine hour

Overhead Applied:

= Actual machine hours × Predetermined Overhead Rate

= 490,000 × $3.40

= $1,666,000

Under-applied Overhead:

= Actual annual overhead cost - Overhead Applied

= $1,675,000 - $1,666,000

= $9,000