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Harima Company uses predetermined overhead rates. At the beginning of 2019, the company estimated total overhead...

Harima Company uses predetermined overhead rates. At the beginning of 2019, the company estimated total overhead costs at $600,000 units. The company assigns overhead on a per unit basis. Actual results for 2019 were costs of $700,000. The company produced 650,000 units. The amount of overhead applied to production was:

A. $650,000

B. $600,000

C. $700,000

D. $553,800

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Answer #1

Estimated overhead of Harima company is $600,000

Estimated unit produced is 600,000 units

Predetermined overhead rate of Harima company

= estimated overhead cost in total / estimated number of units produced

= 600,000 / 600,000 = $1

The company produce 650,000 units actually in 2019

Overhead applied of Harima company

= 650,000 × 1 = $650,000

Overhead applied by Harima company is $650,000.

The overhead is underapplied by $50,000. Actual overhead cost is $700,000 and applied is $650,000. Correct option is A $650,000.

  

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