Fusaro 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 themost recent year. Estimated total fixed manufacturing overhead fromthe beginning of the year $ 684,000Estimated activity level from the beginning of theyear 40,000 machine-hoursActual total fixed manufacturing overhead $ 616,000Actual activity level 37,700 machine-hoursThe amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:A) $644,670B) $684,000C) $68,000D) $580,580

The correct answer is A.

Explanation:

Giving the following information:

Fusaro Corporation uses a predetermined overhead rate base on machine-hours.

Estimated total fixed manufacturing overhead = $684,000

Estimated activity level = 40,000 machine-hours

Actual activity level 37,700 machine-hours

First, we need to calculate the predetermined overhead rate:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 684,000/40,000 = $17.1 per machine hour

Now, we can allocate the manufacturing overhead:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 17.1 * 37,700 = $644,670