5.00 points Cambridge Manufacturing Company applies manufacturing overhead on th

Question

5.00 points Cambridge Manufacturing Company applies manufacturing overhead on the basis of machine hours. At the beginning of the year, the company estimated its total overhead cost to be $325,000 and machine hours to be 25,000. Actual manufacturing overhead and machine hours were $372.000 and 26,000, respectively Required: 1. Compute the predetermined overhead rate per Machine Hour 2. Compute applied manufacturing overhead 3. Compute over- or underapplied manufacturing overhead 9/1/2018 Type here to search

Explanation / Answer

1) Predetermine overhead rate = Estimated manufacturing overhead/Estimated machine hour

                                              = 325000/25000

Predetermine overhead rate = 13 per machine hour

2) Applied overhead = 26000*13 = 338000

3) Under applied overhead = Applied overhead-Actual overhead

                                       = 338000-372000

Under applied overhead = 34000

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