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7 June, 04:00

Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

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  1. 7 June, 06:45
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    Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base (machine hours)

    Explanation:

    Giving the following information:

    The company's predetermined overhead rate of $2.40 per machine-hour was based on a cost formula that estimates $192,000 of total manufacturing overhead for an estimated activity level of 80,000 machine-hours.

    To allocated overhead costs to a specific job, you need to multiply the estimated rate for the number of machine-hours required for the job.

    Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base (machine hours)
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