Question

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $289,920, budgeted machine-hours were 19,200. Actual factory overhead was $294,920, actual machine-hours were 19,750. How much overhead would be applied to production?

Answer 1

Applied Overhead $ 298225

Step-by-step explanation:

Reyes Corporation

Budgeted factory overhead $289,920,

Budgeted machine-hours 19,200

Actual factory overhead $294,920,

Actual machine-hours were 19,750

Overhead Rate = Budgeted factory overhead/Budgeted machine-hours

Overhead Rate = $289,920/ 19,200= 15.1

Applied Overhead = Overhead rate * actual machine hours

Applied Overhead = 15.1 * 19750= $ 298225

Answer 2

Allocated MOH= $297,435

Step-by-step explanation:

Giving the following information:

Budgeted factory overhead was $289,920

budgeted machine-hours were 19,200.

Actual machine-hours were 19,750

First, we need to calculate the estimated overhead rate.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Estimated manufacturing overhead rate= 289,920/19,200= $15.06 per machine hour.

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 15.06*19,750= $297,435