Housholder Corporation uses a predetermined overhead rate base on machine-hours

Question

Housholder Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year.

The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:

$28,000

$309,270

$310,000

$283,650

Estimated total fixed manufacturing overhead from the
beginning of the year $ 310,000 Estimated activity level from the beginning of the year 20,000 machine-hours Actual total fixed manufacturing overhead $ 338,000 Actual activity level 18,300 machine-hours

Explanation / Answer

predetermined overhead rate=(Estimated total fixed manufacturing overhead/Estimated activity level)

=(310,000/20,000)=$15.5

Hence applied overheads=(15.5*18300)

which is equal to

=$283650.

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