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18 February, 23:22

Swifty Corporation thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2150000. The company used 1000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2200000. The budgeted machine hours for the year totaled 20000. How much overhead should be applied to Job No. B12?

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  1. 19 February, 01:27
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    Allocated manufacturing overhead = $10,750

    Explanation:

    Giving the following information:

    The estimate of annual overhead costs for its jobs was $2150000.

    The company used 1000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2200000. The budgeted machine hours for the year totaled 20000.

    Machine hour is the activity base for manufacturing overhead.

    First, we need to calculate the manufacturing overhead rate:

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

    manufacturing overhead rate = 2150000/20000 = $10.75

    Now, we can determine the allocated manufacturing overhead for Job No. B12.

    Allocated manufacturing overhead = manufacturing overhead rate * actual machine hours

    Allocated manufacturing overhead = 10.75 * 1000 = $10,750
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