Question

At the beginning of the year, Monroe Company estimates annual overhead costs to be $800,000 and that 200,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 150,000 hours is______________.

Answer 1

Answer:

The amount of overhead applied during the year is $600,000

Explanation:

Overhead is applied on the basis of predetermined overhead rate which can be calculated as follow,

Predetermined Overhead rate = Total Estimated Overhead /  Total Estimated machine hours

Predetermined Overhead rate = $800,000 / 200,000 = $4

Actual Machine hours = 150,000

Overhead Applied = 150,000 x $4 = $600,000