Question

Question 11 3 pts For the year, the Pittsburgh Forging Company budgeted $7,500,000 for manufacturing overhead, budgeted 250,000 machine hours, had $7.400,000 actual overhead costs, had 240,000 actual machine hours, and had 500.000 direct labor hours. The company applies overhead based on machine hours. What is the over or under applied overhead for the year? (Only enter the amount. The next question will ask whether it was under or over applied.) Question 12 1 pts Is the amount in the previous question under or over applied? Overapplied Underapplied

Answer 1

Predetermined overhead rate = Budgeted Manufacturing Overhead / Budgeted machine hours

Predetermined overhead rate = $7,500,000 / 250,000 M-hrs

Predetermined overhead rate = $30 per Machine hr

Overhead applied = Predetermined overhead rate * Actual Machine hours

Overhead applied = $30 * 240,000 = $7,200,000

Actual overhead = $7,400,000

under-applied overhead = $7,400,000 - $7,200,000 = $20,000

$20,000

Since the Applied overhead is less than the Actual overhead, the overhead is said to be under-applied.

Answers.

11) $20,000

12) Underapplied