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21 March, 06:51

Winston Company estimates that the factory overhead for the following year will be $1,159,400. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 34,100 hours. The total machine hours for the year were 54,200 hours. The actual factory overhead for the year was $1,869,000. Enter the amount as a positive number. a. Determine the total factory overhead amount applied. $ b. Calculate the over - or underapplied amount for the year. $

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  1. 21 March, 07:57
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    a. the total factory overhead amount applied is $ 1,842,800

    b. Under-applied Overheads is $ 26,200

    Explanation:

    Applied Overheads

    Are the Overheads costs accumulated in product cost for the year.

    Applied Overheads = Predetermined Overhead Rate * Actual Activity

    where Predetermined Overhead Rate = Budgeted Overheads / Budgeted Activity.

    Predetermined Overhead Rate = $1,159,400/34,100 machine hours

    = $34 per machine hour

    Applied Overheads = $34 * 54,200 machine hours

    = $ 1,842,800

    Over - or Underapplied

    Is the difference between Actual factory overhead and Applied factory Overheads

    Actual factory overhead = $1,869,000

    Applied factory Overheads = $ 1,842,800

    Actual factory overhead ($1,869,000) >Applied factory Overheads ($ 1,842,800), thus we have an under-applied situation.

    Under-applied Overheads = $1,869,000 - $ 1,842,800

    = $ 26,200
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