Blakely charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
Overhead applied to production totaled:
A) $352,000.
B) $384,000.
C) $550,000.
D) $600,000.
E) some other amount.

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as budgeted manufacturing overhead divided by budgeted machine hours, which is $480,000 / 20,000 = $24 per machine hour. Overhead applied to production is then this rate multiplied by the actual machine hours, which is $24 * 16,000 = $384,000.

Blakely Charges Manufacturing Overhead to Products by Using a Predetermined