9. Acton Corporation, which applies manufacturing overhead on the basis of machi
ID: 2553674 • Letter: 9
Question
9. Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. $139,080 3,800 $137,000 3,780 Estimated manufacturing overhead Actual manufacturing overhead Actual machlne-hours The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the predetermined overhead rate for the year The overhead for the year was O $732 underapplied O $1,348 overapplied O $1,348 underapplied O $732 overappliedExplanation / Answer
Predetermined Overhead rate = Estimated Overhead / Estimated machine hours
= $ 139,080 / 3,800 Machine Hours
= $ 36.60 Per Machine Hour
Overhead Applied = Actual Machine Hours *Predetermined Overhead rate
= 3,780 Machine Hours *$ 36.60 Per Machine Hour
= $ 138,348
Since the Actual Overhead is less than the applied overhead, the overhead is overapplied
The Overapplied Overhead= Applied Overhead - Actual Overhead
= $ 138,348 - $ 137,000
= $ 1,348
Hence the correct answer is $ 1,348 overapplied.
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