Question

mandela manufacturing thinks that the best activity base for its manufacturing overhead is machine hours. the estimate of annual overhead costs is $540,000. the company used 1,000 hours of processing for job a15 during the period and incurred actual overhead costs of $580,000. the budgeted machine hours for the year totaled 20,000. what amount of manufacturing overhead should be applied to job a15?

Answer 1

amount of manufacturing overhead should be applied to job a15 is $27000

Step-by-step explanation:

given data

annual overhead costs = $540,000

machine hours used = 1000

budgeted machine hours = 20000

to find out

what amount of manufacturing overhead should be applied to job

solution

we find first pre determined overhead rate that is

pre determined overhead rate =
`(annual overhead cost)/(budget machine hours)` .......................1

put here value

pre determined overhead rate =
`(540000)/(20000)`

pre determined overhead rate = $27 per machine hour

so

manufacturing overhead is = used machine hours × pre determined overhead rate ...................2

put here value

manufacturing overhead is = 1000 × 27

manufacturing overhead is = 27000

so amount of manufacturing overhead should be applied to job a15 is $27000