Edwards Company applies manufacturing overhead to jobs on the basis of machine h

Question

Edwards Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total 51.600.000 for the year, and machine usage is estimated at 200,000 hours. In January, $166,000 of overhead costs are incurred and 22,000 machine hours are used. For the remainder of the year, $1,730,000 of additional overhead costs are incurred and 214,000 additional machine hours are worked Compute the manufacturing overhead rate for the year. What is the amount of over- or underapplied overhead at January 31? What is the amount of over- or underapplied overhead at December 31?

Explanation / Answer

expected overhead cost 1600000 Machine hour 200000 Manufacturing Overhead rate =1600000/200000 8 Actual overhead at january 166000 overhead applied =8*22000 176000 over Applied overhead 10000 Actual overhead at December =166000+1730000 1896000 overhead applied ==(22000+214000)*8 1888000 Under Applied overhead 8000

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