Question

Logan Products computes its predetermined overhead rate annually on the basis of machine-hours. At the beginning...

Logan Products computes its predetermined overhead rate annually on the basis of machine-hours. At the beginning of the year, it estimated that its total manufacturing overhead would be $356,500 and machines would be run a total of 24,000 hours. Its actual total manufacturing overhead for the year was $344,400 and its actual total machine-hours was 23,500 hours.

Required:

Compute the company’s predetermined overhead rate for the year, calculate the total overhead applied, and determine the amount of under- or overapplied overhead in the year. (Round your predetermined overhead rate to 2 decimal places.)

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Answer #1
Answer
Total manufacturing overhead $    356,500
Divide by Estimated Machine hours 24000
Predetermined overhead rate 14.85 per machine-hour
Actual machine-hours 23500
X Predetermined overhead rate 14.85
Total overhead applied $    348,975
Total overhead applied $    348,975
Less: Actual manufacturing overhead $    344,400
Overapplied overhead $        4,575
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