Question

Winston Company estimates that the factory overhead for the following year will be $938,600. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 36,100 hours. The total machine hours for the year were 54,100. The actual factory overhead for the year was $1,398,000.

a. Determine the total factory overhead amount applied.
b. Calculate the over or under the applied amount for the year.

Answer 1

a. Determine the total factory overhead amount applied.

$1,406,600

b. Calculate the over or under the applied amount for the year.

$8,600 over applied

Step-by-step explanation:

Estimated factory overhead = $938,600

Estimated machine hours = 36,100 hours

Actual Machine hours = 54,100 hours

Actual Factory overhead = $1,398,000

Predetermined overhead rate = $938,600 / 36,100

Predetermined overhead rate = $26 per machine hour

Applied overhead = Predetermined overhead rate x Actual Machine hours

Applied overhead = $26 x 54,100

Applied overhead = $1,406,600

Over or under the applied amount for the year = Applied overhead - Actual overhead

Over or under the applied amount for the year = $1,406,600 - 1,398,000

Over applied amount for the year = $8,600