2. Change all of the numbers in the data area of your worksheet so that it looks
ID: 2551852 • Letter: 2
Question
2. Change all of the numbers in the data area of your worksheet so that it looks like this: 1 Chapter 2: Applying Excel 3 Data 4 Alocation base 5 Estimated manufacturing overhead cost 6 Estmated total amount of the allocation base 400 37,000 machine- hours 7 Actual manufacturing overhead cost 8 Actual total amount of the allocation base 784,300 80,000 machine hours If your tormulas are correct, you should get the correct answers to the following questions (a) what is the predetermined overhead rate? (Round your answer to 2 decimal places.) per machine- hour (b) By how much is the manufacturing overhead underapplied or overapplied? 3 Either print or make a copy of your worksheet in your workbook before proceeding. You will need to refer back to this worksheet Change the estimated total amount of the allocation base to 92,000 machine-hours, but keep everything the same as in Requirement 2. The data area of your worksheet should now look like this Chapter 2: Applying Excel 3 Data 4 Allocation base 5 Estimated manufacturing overhead cost 6 Estimaled total amount of the allocation base 5800,400 92,000 machine- Actual manufacturing overhead cost 8 Actual total amount of the allocation base $784 300 80,000 machine- hours (a) By how much is the manufacturing overhead underapplied or overapplied?Explanation / Answer
The Over or Under applied manufacturing overhead is termed as the difference between the manufacturing cost applied and manufacturing overhead cost actually incurred. Say for e.g. Manufacturing overhead applied is 100 whereas manufacturing overhead actually incurred is 120 it means that there is under absorption of manufacturing overhead. Similarly if the applied overhead is 120 but actual is 100 it means that there has been over absorption of manufacturing overhead. Over and Under Absorption is a very common phenomenon simply because absorption rate is determined at the beginning and actual overhead is actually incurred.
Simply put - if Actual Overhead - Applied Overhead is positive than it is Under Absorption of Overhead.
if Actual Overhead - Applied Overhead is negative than it is Over Absorption of Overhead.
2.a Predetermined overhead Rate basis Machine Hours = $800,400/87000 = $9.20 per machine hours.
Overhead Applied = Actual Machine Hours * Overhead Rate = 80,000*9.20 = $736,000.
Actual Overhead = 784,300
Under Absorption = 784,300-736,000 = $48,300
3.a Predetermined overhead Rate basis Machine Hours = $800,400/92000 = $8.70 per machine hours.
Overhead Applied = Actual Machine Hours * Overhead Rate = 80,000*8.70 = $696,000.
Actual Overhead = 784,300
Under Absorption = 784,300-696,000 = $88,300.
All options are applicable.
4.a Predetermined overhead Rate basis Machine Hours = $800,400/87,000 = $9.20 per machine hours.
Overhead Applied = Actual Machine Hours * Overhead Rate = 80,000*9.20 = $736,000.
Actual Overhead = $789,800 (The figure in the question is not clear completely)
Under Absorption = 789,800-736,000 = $53,800.
option 2 is applicable since from point 2 the estimation base i..e Estimated Machine Hour and Estimated Manufacturing overhead has not changed..
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