Question

Kubal Inc. applies overhead based on machine hours. Kubal reports the following for the year just ended: Budgeted overhead for the year $280,000 Budgeted machine hours 2,000 Actual overhead for the year $305,000 Actual machine hours 2,400 What is the amount of over- or under-applied overhead for the year

Answer 1

Kubal Inc. has an under-applied overhead of $31,000 for the year, calculated by determining a predetermined overhead rate, applying it to the actual machine hours, and finding the difference between the actual overhead and the applied overhead.

Step-by-step explanation:

The student's question relates to determining the amount of over- or under-applied overhead for Kubal Inc. based on their report of budgeted and actual overheads, as well as their budgeted and actual machine hours for the year that just ended. To calculate this, one must first determine the predetermined overhead rate by dividing the budgeted overhead by the budgeted machine hours. Then, apply this rate to the actual machine hours to find the applied overhead. The difference between the actual overhead and the applied overhead reflects the amount of over- or under-applied overhead.

Here's the calculation:

Applied Overhead = $140 * 2,400 hours

Over- or Under-applied Overhead = -$31,000 (under-applied)

In this case, Kubal Inc. has an under-applied overhead of $31,000 for the year.

Answer 2

Under/over applied overhead= $21,000 overapplied

Step-by-step explanation:

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= 280,000/2,000

Predetermined manufacturing overhead rate= $140 per machine hour

Now, we can allocate overhead:

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

Allocated MOH= 140*2,400

Allocated MOH= $336,000

Finally, the under/over allocation:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 305,000 - 336,000

Under/over applied overhead= $21,000 overapplied