Asked by Jeremy Dyzenhaus on Jun 18, 2024
Verified
Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. 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: (Round your intermediate calculations to 2 decimal places.)
A) $213,248
B) $157,584
C) $165,718
D) $165,963
Manufacturing Overhead
Manufacturing overhead encompasses all the indirect costs associated with producing goods, except for direct labor and direct materials.
- Learn the fundamentals of manufacturing overhead and its implementation according to various bases such as direct labor-hours and machine-hours.
- Work out predetermined rates for overhead and grasp their employment in assigning manufacturing overhead expenditures to products or job orders.
Verified Answer
IG
Iemina GreceaJun 19, 2024
Final Answer :
D
Explanation :
To calculate the applied manufacturing overhead, we first need to determine the predetermined overhead rate. The formula for that is:
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine-Hours
Predetermined Overhead Rate = $211,200 / 32,000 machine-hours = $6.60 per machine-hour
To calculate the applied manufacturing overhead, we use the actual machine-hours worked during the year:
Applied Overhead = Actual Machine-Hours x Predetermined Overhead Rate
Applied Overhead = 25,164 machine-hours x $6.60 per machine-hour = $165,963
Therefore, the closest answer is D) $165,963.
Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine-Hours
Predetermined Overhead Rate = $211,200 / 32,000 machine-hours = $6.60 per machine-hour
To calculate the applied manufacturing overhead, we use the actual machine-hours worked during the year:
Applied Overhead = Actual Machine-Hours x Predetermined Overhead Rate
Applied Overhead = 25,164 machine-hours x $6.60 per machine-hour = $165,963
Therefore, the closest answer is D) $165,963.
Learning Objectives
- Learn the fundamentals of manufacturing overhead and its implementation according to various bases such as direct labor-hours and machine-hours.
- Work out predetermined rates for overhead and grasp their employment in assigning manufacturing overhead expenditures to products or job orders.
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