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2. Change all of the numbers in the data area of your worksheet so that it looks

ID: 2392841 • Letter: 2

Question

2. Change all of the numbers in the data area of your worksheet so that it looks like this: 4 Allocation base Machine-hours Estimated manufacturing overhead cost Estimated total amount of the allocation base Actual manufacturing overhead cost Actual total amount of the allocation base $468,000 72,000 machine- hours $480,800 78,000 machine- hours If your formulas are correct, you should get the correct answers to the following questions (a)What is the predetermined overhead rate? (Round your answer to 2 decimal places.) Predetermined overhead rate per machine- hour (b)By how much is the manufacturing overhead underapplied or overapplied? manufacturing overhead

Explanation / Answer

(a) Pre-determined overhead rate = Estimated manufacturing overhead cost/Estimated machine hours

= 468,000/72,000

= $6.50

(b)

Actual overhead rate = Actual manufacturing overhead cost/Actual machine hours

= 480,800/78,000

= $6.16

Overapplied overhead = Estimated overhead rate - Actual overhead rate

Hence, manufacturing overhead has been overapplied by = 6.50 - 6.16

= $0.34