Question

Macklin Company forecasts that total overhead for the current year will be $13,500,000 with 500,000 total machine hours. Year to date, the actual overhead is $14,000,000 and the actual machine hours are 530,000 hours. If Macklin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Macklin Company forecasts that total overhead for the current year will be $13,500,000 with 500,000 total machine hours.

Year to date, the actual overhead is $14,000,000 and the actual machine hours are 530,000 hours.

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 13,500,000/500,000

Predetermined manufacturing overhead rate= $27 per machine-hour

Now, we can allocate overhead:

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

Allocated MOH= 27*530,000= 14,310,000

Finally, the under/over allocated overhead:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 14,000,000 - 14,310,000

Under/over applied overhead= 310,000 overallocated