Erca, Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $15.00 per machine hour was established for 2013.
(a.) If 9,000 machine hours were expected to be used during 2013, how much overhead was expected to be incurred?
(b.) Actual overhead incurred during 2013 totaled $135,000, and 9,200 machine hours were used during 2013. Calculate the amount of over-or underapplied overhead for 2013.
(c.) Explain the accounting necessary for the over- or underapplied overhead for the year.

Question

Quizplus · Accepted Answer

The Answer of Erca, Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $15.00 per machine hour was established for 2013.
(a.) If 9,000 machine hours were expected to be used during 2013, how much overhead was expected to be incurred?
(b.) Actual overhead incurred during 2013 totaled $135,000, and 9,200 machine hours were used during 2013. Calculate the amount of over-or underapplied overhead for 2013.
(c.) Explain the accounting necessary for the over- or underapplied overhead for the year.

Erca, Inc Produces Automobile Bumpers