Verlander Upton Quality Products uses a job-order costing system. Overhead costs
ID: 2337072 • Letter: V
Question
Verlander Upton Quality Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that the company 85,600 machine-hours and incur $196,880 in manufacturing overhead costs for the year Required . Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.) per MH 2. Assume that during the year the company actually worked only 80,300 machine-hours and incurred $194,000 of manufacturing overhead costs. C year. Compute the amount of underapplied or overapplied overhead for the (Round your intermediate calculation to 2 decimal places.)Explanation / Answer
1.Predetermined overhead rate=Estimated manufacturing overheads/Estimated machine hours
=(196880/85600)=$2.3 per MH
2.Applied overhead=Predetermined overhead rate*Actual machine hours
=(2.3*80300)=$184690
Hence since applied overhead is less than actual overhead;hence
underapplied overhead=(194000-184690)=$9310.
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