Question

4. Change the estimated total amount of the allocation base back to 39,000 machine-hours, so that the data area of you worksheet looks exactly the same as in Requirement 2. Now change the actual manufacturing overhead cost from $184,800 to $193,500. The data area of your worksheet should now look like this: 1 Chapter 3: Applying Excel 4 5 6 7 8 Data Allocation base Estimated manufacturing overhead cost Estimated total amount of the allocation base Actual manufacturing overhead cost Actual total amount of the allocation base Machine-hours $ 175,500 39,000 machine-hours $ 193,500 35,000 machine-hours (a) By how much is the manufacturing overhead underapplied or overapplied? manufacturing overhead (b) Why is the amount of underapplied (overapplied) manufacturing overhead different from Requirement 2 above? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers. Any boxes left with a question mark will be automatically graded as incorrect.) The predetermined overhead rate changed. U The change in the actual manufacturing overhead cost directly resulted in a comparable change in the amount of underapplied (overapplied) manufacturing overhead. The change in the estimated total amount of the allocation base affected the amount of manufacturing overhead applied.

Answer 1

Solution a:

Predetermined overhead rate = Estimated manufacturing overhead / estimated machine hours = $175,500/ 39000 = $4.50 per machine hour

Manufacturing overhead applied = 35000*$4.50 = $157,500

Actual overhead = $193,500

Underapplied overhead = $193,500 - $157,500 = $36,000

Note: Solution b could not be provided as requirement 2 is not available in question.