Beltran Corporation produces wooden and aluminum baseball bats. In preparing the

Question

Beltran Corporation produces wooden and aluminum baseball bats. In preparing the current budget, Beltran's management estimated a total of $387,000 in manufacturing overhead costs and 12,900 machine hours for the coming year. In December, Beltran's accountants reported actual manufacturing overhead incurred of $578,000 and 12,400 machine hours used during the year. Beltran applies overhead based on machine hours. What was Beltran's predetermined overhead rate for the year? Predetermined overhead rate How much manufacturing overhead did Beltran apply during the year?

Explanation / Answer

a). Solution :- Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours.

= 387000 / 12900

= $ 30 per hour.

Conclusion :-  Predetermined overhead rate = $ 30 per hour.

b). Solution :- Applied manufacturing overhead = Actual machine hours * Predetermined overhead rate.

= 12400 * 30

= $ 372000.

Conclusion :- Applied manufacturing overhead = $ 372000.

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