Linear Technologies Inc. applies manufacturing overhead based on machine hours. Budgeted manufacturing overhead cost for the coming year is $600,000 and budgeted machine hours are 300,000 hours. Actual manufacturing overhead totaled $80,000. Manufacturing overhead was overapplied by $20,000. How many machine hours were actually used during the year?

Question

Quizplus · Accepted Answer

Actual MOH $80,000 + Overapplied MOH $20,000 = Applied MOH $100,000.
Budgeted MOH, $600,000 / Budgeted MOH, 300,000 machine hours = Budgeted MOH rate $2 /machine hour. $2/machine hour X 50,000 machine hours = $100,000 Applied MOH. Therefore, $100,000 / $2 = 50,000 machine hours actually used