Question

At the beginning of the year, a company predicts total overhead costs of $810,900. The company applies overhead using machine hours and estimates it will use 1,530 machine hours during the year. What amount of overhead should be applied to Job 65A if that job uses 26 machine hours during January?

Answer 1

Answer:

$13,780

Explanation:

For computing the overhead applied first we have to determine the predetermined overhead rate which is shown below:

Predetermined overhead rate = Total overhead cost ÷ Machine hours

= $810,900 ÷ 1,530 machine hours

= $530

Now the amount of overhead applied is

= predetermined overhead rate × number of machine hours used

= $530 × 26 machine hours

= $13,780

By multiplying the predetermined overhead rate with the number of machine hours used we can get the amount of overhead applied