Giles Inc. manufactures high quality golfing equipment. Giles assigns overhead t

Question

Giles Inc. manufactures high quality golfing equipment. Giles assigns overhead to products based on machine hours. At the beginning of the current year, estimated overhead costs were $500,000 and estimated machine hours were 50,000. During the year, 54,000 machine hours were actually used. By the end of the year, actual overhead costs were calculated to be $529,200.

What was the predetermined overhead rate?
Answer
a. $0.10 per machine hour
b. $9.80 per machine hour
c. $10.58 per machine hour
d. $10.00 per machine hour
3 points
Question 54

Refer to the Giles Inc. information above. How much total overhead was applied to products during the year?
Answer
a.
$571,536
b.
$540,000
c. $490,000
d. $529,200
3 points
Question 55


Refer to the Giles Inc. information above. By how much was overhead over- or underapplied for the year?
Answer
a. $39,200 underapplied
b. $29,200 underapplied
c. $10,800 overapplied
d. $42,336 overapplied

Explanation / Answer

Predetermined Rate = Budgeted Overhead / Budgeted Hours
                               = 500000/50000
                               = $10/ hr

Answer is (d)

Overhead Charged = Predetermined Rate X actualHours

                            = $10 X 54000 = $ 540000

Answer is (b)

Overhead over applied = Overhead Charged - Actual Overhead

                                   = $540000- $529200

                                   = $10800

Answer is (c)

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