Question

Blakely charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year: Budgeted manufacturing overhead: $480,000 Actual manufacturing overhead: $440,000 Budgeted machine hours: 20,000 Actual machine hours: 16,000 Overhead applied to production totaled:Select one:a. $352,000b. $384,000c. $550,000d. $600,000e. some other amount

Answer 1

The correct answer is B: $384,000

Step-by-step explanation:

Giving the following information:

Blakely charges manufacturing overhead to products by using a predetermined application rate computed based on machine hours.

The following data pertain to the current year:

Budgeted manufacturing overhead: $480,000

Actual manufacturing overhead: $440,000

Budgeted machine hours: 20,000

Actual machine hours: 16,000

First, we need to calculate the manufacturing overhead rate:

manufacturing overhead rate= total estimated manufacturing overhead/ total amount of allocation base

manufacturing overhead rate= 480000/20000= 424 per hour

Allocated manufacturing overhead= overhead rate*actual hours= 24*16000= 384,000