Question

Swifty Corporation thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2150000. The company used 1000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2200000. The budgeted machine hours for the year totaled 20000. How much overhead should be applied to Job No. B12?

Answer 1

Allocated manufacturing overhead= $10,750

Step-by-step explanation:

Giving the following information:

The estimate of annual overhead costs for its jobs was $2150000.

The company used 1000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2200000. The budgeted machine hours for the year totaled 20000.

Machine hour is the activity base for manufacturing overhead.

First, we need to calculate the manufacturing overhead rate:

manufacturing overhead rate= total estimated manufacturing overhead for the period/ total amount of allocation base

manufacturing overhead rate= 2150000/20000= $10.75

Now, we can determine the allocated manufacturing overhead for Job No. B12.

Allocated manufacturing overhead= manufacturing overhead rate* actual machine hours

Allocated manufacturing overhead= 10.75* 1000= $10,750