Question

Bernson Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $492,000 and 30,000 machine-hours for the period. The company incurred actual total fixed manufacturing overhead of $517,000 and 28,300 total machine-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)
(A) $25,000
(B) $487,703
(C) $464,120
(D) $492,000

Answer 1

Answer: Option(C) is correct.

Explanation:

Given that,

Total fixed manufacturing overhead (estimated) = $492,000

Machine-hours for the period (estimated) = 30000

Actual total fixed manufacturing overhead = $517,000

Total machine-hours during the period (actual) = 28,300

Predetermined overhead rate = $\frac{Estimated\ total\ fixed\ manufacturing\ overhead}{Estimated\ machine\ hours}$

= $\frac{492000}{30000}$

= $ 16.4 Per Machine Hour

Amount of overhead applied = Actual machine hours × Predetermined overhead rate

= 28,300 machine hours × $ 16.4 Per Machine Hour

=  $ 464,120