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Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data...

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.

Estimated manufacturing overhead $325,440
Estimated machine-hours 2,400
Actual manufacturing overhead $320,300
Actual machine-hours 2,370


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 for the year.

The overhead for the year was:

Noreen 4e Recheck 2017-16-03

$4,068 underapplied

$1,072 underapplied

$4,068 overapplied

$1,072 overapplied

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Answer #1

D. $1,072 overapplied

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base

= $325,440 ÷ 2,400 machine-hours

= $135.60 per machine-hour

Applied manufacturing overhead = Predetermined overhead rate × Actual machine-hours

Applied manufacturing overhead = $135.60 × 2,370 = $321,372

Overapplied manufacturing overhead = Actual manufacturing overhead - Applied manufacturing overhead = $320,300 - $321,372 = $1,072 overapplied

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