Actual fixed overhead is $33,300 (12,000 machine hours)and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set.If 11,500 standard hours were allowed for actual production,applied fixed overhead is
A)$33,300.
B)$34,000.
C)$34,500.
D)not determinable without knowing the actual number of units produced.

Question

Quizplus · Accepted Answer

The applied fixed overhead is calculated using the predetermined overhead rate and the actual production hours.

Predetermined rate = Estimated fixed overhead / Estimated machine hours 
= $34,000 / 12,000 machine hours 
= $2.83 per machine hour

Applied fixed overhead = Predetermined rate x Actual production hours 
= $2.83 x 11,500 standard hours 
= $32,545

However, the actual fixed overhead is given as $33,300. This means that there was an underapplied overhead of $755 ($33,300 - $32,545).

To reconcile the underapplied overhead, the applied overhead needs to be increased by the underapplied amount, i.e.,

Applied fixed overhead = $32,545 + $755 
= $33,300

Therefore, the applied fixed overhead is $33,300, which is option C.

Actual Fixed Overhead Is $33,300 (12,000 Machine Hours)and Fixed Overhead