Question

Calculator Cavy Company estimates that the factory overhead for the following year will be $1,191,300. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 20,900 hours. The machine hours for the month of April for all of the jobs were 5,620. If the actual factory overhead for April totaled $313,613, determine the over- or underapplied amount for the month. Enter the amount as a positive number

Answer 1

Answer: $6,727 Overapplied

Calculation:

Step 1:

Predetermined factory overhead rate = Total Factory overheads / Total Machine hours

Predetermined factory overhead rate = $1,191,300 / 20,900 machine hours = $57 per machine hour

Step 2:

Applied factory overheads = Actual machine hours * Predetermined factory overhead rate

Applied factory overheads = 5,620 machine hours * $57 per machine hour = $320,340

Step 3:

Actual factory overheads = $313,613

Over applied overheads = $320,340 - $313,613 = $6,727

All the best...