Question

Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operationsEstimated manufacturing overhead $357,000. Estimated machine hours $8,500. Actual manufacturing overhead $358,000. Actual machine hours 8560. The estimates of the manufacturing overhead and of machine hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate of the year.A. Calculate the predetermine overhead rateB. Calculate the applied manufacturing overhead for the year.C. Provide the amount of underapplied or overapplied overhead for the year.D. Give the journal entry to record part (c)

Answer 1

Explanation:

The computation is shown below:

A.

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated machine labor-hours)

= $357,000 ÷ 8,500 hours

= $42

B. Now we have to find the applied overhead which equal to

= Actual machine labor-hours × predetermined overhead rate

= 8,560 hours × $42

= $359,520

C.

So, the ending overhead equals to

= Actual manufacturing overhead -  applied overhead

= $358,000 - $359,520

= $1,520 over-applied