4. Change the estimated total amount of the allocation base back to 72,000 machi

Question

4. Change the estimated total amount of the allocation base back to 72,000 machine-hours, so that the data area of you worksheet looks exactly the same as in Requirement 2. Now change the actual manufacturing overhead cost from $480,800 to $488,800. The data area of your worksheet should now look like this: 4 Allocation base Machine-hours Estimated manufacturing overhead cost Estimated total amount of the allocation base Actual manufacturing overhead cost Actual total amount of the allocation base $468,000 72,000 machine- hours $488,800 78,000 machine- hours (a)By how much is the manufacturing overhead underapplied or overapplied? manufacturing overhead (b)Why is the amount of underapplied (overapplied) manufacturing overhead different from Requirement 2 above? (Select all that apply.) The predetermined overhead rate changed The change in the actual manufacturing overhead cost directly resulted in a omparable change in the amount of underapplied (overapplied) manufacturing overhead The change in the estimated total amount of the allocation base affected the amount of manufacturing overhead applied

Explanation / Answer

Predetermined OH rate = 468000/72000 = $                  6.50 Overhead applied = 78000*6.50 = $         5,07,000 Actual overhead $         4,88,800 a) Overapplied manufacturing overhead = 507000-488800 = $             18,200 b) The change in the actual manufacturing overhead cost directly resulted in a ……………………………………….applied.

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