Actual total amount of the allocation base 77,000 Machine hours By how much is t

Question

Actual total amount of the allocation base 77,000 Machine hours

      

By how much is the manufacturing overhead underapplied or overapplied?

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 64,000 machine-hours, but keep everything the same as in Requirement 2. The data area of your worksheet should now look like this:

By how much is the manufacturing overhead underapplied or overapplied?

     

Change the estimated total amount of the allocation base back to 70,000 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 $436,600 to $428,300. The data area of your worksheet should now look like this:

machine-hours

By how much is the manufacturing overhead underapplied or overapplied?

Data 4 Allocation base Machine-hours 5 Estimated manufacturing overhead cost $448,000 6 Estimated total amount of the allocation base 70,000 machine-hours 7 Actual manufacturing overhead cost $436,600 8

Actual total amount of the allocation base 77,000 Machine hours

a) What is the predetermined overhead rate? (Round your answer to 2 decimal places.)

      

(b)

By how much is the manufacturing overhead underapplied or overapplied?

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 64,000 machine-hours, but keep everything the same as in Requirement 2. The data area of your worksheet should now look like this:

Allocation base Machine-hours 5 Estimated manufacturing overhead cost $448,000 6 Estimated total amount of the allocation base 64,000 machine-hours 7 Actual manufacturing overhead cost $436,600 8 Actual total amount of the allocation base 77,000 machine hours

Explanation / Answer

a) Predetermined Overhead Rate = Estimated manufacturing overhead cost/Allocation Base

= $448,000/70,000 = $6.40 per hour

b) Applied Manufacturing Overhead = Actual base*Predetermined Overhead Rate

= 77,000 machine hours*$6.40 = $492,800

Underapplied/(Overapplied) Overhead = Actual Overhead - Applied Manufacturing Overhead

= $436,600 - $492,800 = ($56,200)

Thus the manufacturing overhead is overapplied by $56,200.

c) Predetermined OH Rate in this case = Estimated manufacturing overhead cost/Allocation Base

= $448,000/64,000 = $7.00 per hour

Applied Manufacturing Overhead = Actual base*Predetermined Overhead Rate

= 77,000 machine hours*$7.00 = $539,000

Underapplied/(Overapplied) Overhead = Actual Overhead - Applied Manufacturing Overhead

= $436,600 - $539,000 = ($102,400)

Thus the manufacturing overhead is overapplied by $102,400.

d) Underapplied/(Overapplied) Overhead = Actual Overhead - Applied Manufacturing Overhead

= $428,300 - $492,800 = ($64,500)

Thus the manufacturing overhead is overapplied by $64,500.

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