Multiple Choice Question 125 Oriole Company applies overhead on the basis of mac

Question

Multiple Choice Question 125 Oriole Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period Estimated annual overhead cost $1600000 Actual annual overhead cost Estimated machine hours Actual machine hours 1575000 500000 390000 O $1600000 applied and $327000 overapplied O $1248000 applied and $327000 underapplied O $1575000 applied and neither under-nor overapplied $1248000 applied and $327000 overapplied

Explanation / Answer

1

Answer is 1248000 applied and 327000 underapplied

2

$85000 overapplied

Overhead as % of direct labor cost =600000/400000

overhead applied =320000*1.50 =480000

overapplied =480000-395000 =85000

Overhead Rate =Estimated annual overhead cost / Estimated machine Hour =1600000/500000 =$3.20 Actual machine Hour =500000*3.20 =12480000

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