Question

Watson Company applies overhead on the basis of machine hours. Given the following data, compute the amount of overhead applied for the period. Estimated annual overhead cost $1,500,000 Actual annual overhead cost $1,485,000 Estimated machine hours 300,000 Actual machine hours 295,000
A: $1,475,000
B: $1,500,000
C: $1,525,425
D: $1,485,000

Answer 1

Answer:

A: $1,475,000

Explanation:

The computation of the overhead applied is shown below:

But before that first determine the predetermined overhead rate which is

= Estimated annual overhead cost ÷ Estimated machine hours

= $1,500,000 ÷ 300,000

= $5

Now the applied overhead is

= Predetermined overhead rate × Actual machine hours

= $5 × 295,000

= $1,475,000