Acton Corporation, which applies manufacturing overhead on the basis of machine-

Question

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated machine-hours Actual manufacturing overhead Actual machine-hours $55,020 1,400 $51,800 1,330 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purposeot computing the company's predetermined overhead rate for the year. The overhead for the year was: O $2.751 underapplied O $469 underapplied O $2.751 overapplied O $469 overapplied

Explanation / Answer

The overhead for the year was:
$469 overapplied

Estimated Manufacturing Overhead =$55020

Estimated Machine hours = 1400

Pre-determind overhead rate = $55020 / 1400 = $39.3 per machine hour

Actual Machine hours = 1330

Overhead applied during the year = 1330 x $39.3 = $52269

Actual Overhead = $51800

Overhead Over-applied = $(52269 - 51800) = $469

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