Time remaining: 2:26:26 18. Sutherland Company listed the following data for 201

Question

Time remaining: 2:26:26 18. Sutherland Company listed the following data for 2016: Budgeted factory overhead Budgeted direct labor hours Budgeted machine hours Actual factory overhead Actual direct labor hours Actual machine hours Round calculations to two significant digits $2100,000 89,000 51,000 2,201,000 83,700 48,900 If overhead is applied based on machine hours, the overapplied/underapplied overhead is: O $187298 underapplied O $187.298 overapplied. O $176.358 underapplied O $176,358 overapplied. O s0-

Explanation / Answer

Solution: Answer is 1st option $187,298 underapplied Working Notes: Actual factory overhead = $2,201,000 Predetermined overhead rate = Budgeted factory overhead/Budgeted machine hours =$2,100,000/51,000 =$41.17647 =$41.18 per machine hour The overapplied or underapplied overhead = (Actual machine hours x Predetermined OH rate) - Actual factory overhead =($41.18 x 48,900) - $2,201,000 =$2,013,702 - $2,201,000 =-$187,298 =$187,298 Underapplied -ve sign shows that applied overhead lower than actual overhead in other word Overhead is underapplied. Please feel free to ask if anything about above solution in comment section of the question.

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