Acton Corporation, which applies manufacturing overhead on the basis of machine-

Question

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. $139,080 3,800 $137,000 Estimated manufactuning overhead Estimated machine-hours Actual manufacturing overhead Actual machine-hours 3,780 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The overhead for the year was: A. $732 underapplied B. $1,348 underapplied C.$732 overapplied D. $1,348 overapplied

Explanation / Answer

Predetermine overhead rate = Estimated overhead/Estimated machien hour

= 139080/3800

Predetermine overhead rate = 36.60 per machine hour

Overhead applied = 36.60*3780 = 138348

Actual overhead = 137000

Over applied overhead = 138348-137000 = 1348

So answer is d) $1348 Over applied

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