Question

Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.

Estimated manufacturing overhead $ 351,960
Estimated machine-hours 8,400
Actual manufacturing overhead $ 352,960
Actual machine-hours 8,460
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year.
The applied manufacturing overhead for the year is closest to:_________.
A. $357,012
B. $354,474
C. $355,489
D. $352,951

Answer 1

B. $354,474

Step-by-step explanation:

The Overheads that are initially included in Work In Process before determination of Actual Overheads are called Applied Overheads.

Applied Overheads = Predetermined overhead rate × Actual level of Activity.

Thus said we need to first determine the Predetermined overhead rate :

Predetermined overhead rate = Budgeted Overheads / Budgeted Activity

= $ 351,960 / 8,400 machine hours

= $41.90 per machine hour

Therefore,

Applied Overheads = $41.90 × 8,460 machine hours

= $354,474

Conclusion :

The applied manufacturing overhead for the year is closest to: $354,474