Question

Fusaro Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from the beginning of the year $ 684,000 Estimated activity level from the beginning of the year 40,000 machine-hours Actual total fixed manufacturing overhead $ 616,000 Actual activity level 37,700 machine-hours The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

To calculate the manufacturing overhead applied to all jobs, we first find the predetermined overhead rate by dividing the estimated total fixed manufacturing overhead by the estimated activity level. Multiplying the actual activity level by this rate gives us the total overhead applied, which is $641,900.

Step-by-step explanation:

The question at hand requires the calculation of the manufacturing overhead that would have been applied to all jobs during the period using a predetermined overhead rate based on machine-hours. To find this, we first need to calculate the predetermined overhead rate using the provided estimated total fixed manufacturing overhead and the estimated activity level at the beginning of the year.

Using the formula:

Predetermined overhead rate = Estimated total fixed manufacturing overhead / Estimated activity level

We get:

Predetermined overhead rate = $684,000 / 40,000 machine-hours = $17 per machine-hour

The amount of overhead applied to all jobs is then found by multiplying the actual activity level by the predetermined overhead rate.

Overhead applied = Actual activity level x Predetermined overhead rate

Overhead applied = 37,700 machine-hours x $17/machine-hour = $641,900