Cahin Corporation applies manufacturing overhead on the basis of machine-hours.

Question

Cahin Corporation applies manufacturing overhead on the basis of machine-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $21,060. Actual manufacturing overhead for the year amounted to $13,000 and actual machine-hours were 1,380. The company's predetermined overhead rate for the year was $16.20 per machine-hour.

The applied manufacturing overhead for the year was closest to:


a. $23,732 b. $21,060 c. $22,356 d. $13,800

Explanation / Answer

Answer: C. $22,356 Cachin Corporation apples manufacturing overhead on the basis of machine hours. Here the actual machine hours used for production = 1,380 Predetermined overhead rate for the year              = 16.20 per hour So the manufacturing overheasd applied in the year = number of hours used x rate per hour                                                                               = 1,380 x 16.20 The applied manufacturing overhead for the year    = $22,356.

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