Giles Inc. Giles Inc. manufactures high quality golfing equipment. Giles assigns overhead to products based on machine hours. At the beginning of the current year, estimated overhead costs were $500,000 and estimated machine hours were 50,000. During the year, 54,000 machine hours were actually used. By the end of the year, actual overhead costs were calculated to be $529,200.
Refer to the Giles Inc. information above. How much total overhead was applied to products during the year?

Question

Quizplus · Accepted Answer

The total overhead applied to products during the year can be calculated as follows:
Overhead rate = Estimated overhead / Estimated machine hours
= $500,000 / 50,000 machine hours
= $10 per machine hour

Total overhead applied = Overhead rate x Actual machine hours
= $10 x 54,000 machine hours
= $540,000

Therefore, the correct answer is B) $540,000.

Giles Inc Giles Inc