Asked by Isabella Garcia on Jun 17, 2024
Verified
Rist Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation estimated that it would incur $255,000 in manufacturing overhead during the year and that it would work 100,000 machine-hours. The Corporation actually worked 105,000 machine-hours and incurred $270,000 in manufacturing overhead costs. By how much was manufacturing overhead underapplied or overapplied for the year?
A) $15,000 overapplied
B) $15,000 underapplied
C) $2,250 overapplied
D) $2,250 underapplied
Predetermined Overhead Rate
A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a relevant activity, such as machine hours or labor hours.
Underapplied
Describes a situation where the allocated overhead costs in accounting are less than the actual overhead costs incurred.
Overapplied
A scenario in which the overhead cost assigned to manufacturing exceeds the overhead that was actually incurred.
- Calculate predetermined overhead rates and apply overhead to jobs based on various activity bases.
- Analyze the conditions provoking the treatment of manufacturing overhead as surcharged or short-charged.
Verified Answer
Learning Objectives
- Calculate predetermined overhead rates and apply overhead to jobs based on various activity bases.
- Analyze the conditions provoking the treatment of manufacturing overhead as surcharged or short-charged.
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