Question

Tom’s Tool & Die uses a predetermined factory overhead rate based on machine-hours. For August, Tom’s budgeted overhead was $108,000 based on a budgeted volume of 36,000 machine-hours. Actual overhead amounted to $108,000 with actual machine-hours totaling 37,000.

Required:

What was over- or underapplied manufacturing overhead in August?

Answer 1

Answer-------------Overapplied $3,000

Working

(A)	Estimated Manufacturing Overheads	$ 108,000
(B)	Estimated Machine hour	36,000
C= (A/B)	Predetermined Overhead rate	$               3.00
(D)	ActualMachine hour	37,000
E=(DxC)	Overheads Applied	111,000
(F)	Actual Overheads	$ 108,000
G=(F-E)	Overheads Overapplied	$ 3,000