Question

Tier, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period. Tiger's manufacturing overhead is:a. $50,000 overappliedb. $50,000 underappliedc. $60,000 overappliedd. $60,000 underapplied

Answer 1

The correct answer is B: $50000 underapplied

Step-by-step explanation:

Giving the following information:

Tier, Inc. had actual manufacturing overhead costs of $1,210,000 and a predetermined overhead rate of $4.00 per machine hour. Tiger, Inc. worked 290,000 machine hours during the period.

The manufacturing overhead applied is= 4*290000=$1,160,000

Actual overhead= $1,210,000

Variance= 1,210,000 - 1,160,000= 50000 underapplied

It was underapplied because it incurred in higher manufacturing overhead costs.