At the beginning of the year Monroe Company estimates annual overhead costs to be $2400000 and that 300000 machine hours will be operated. Using machine hours as a base the amount of overhead applied during the year if actual machine hours for the year was 315000 hours is

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as follows:

Predetermined overhead rate = Estimated annual overhead costs / Estimated machine hours 
= $2400000 / 300000 
= $8 per machine hour

The amount of overhead applied during the year is calculated as follows:

Amount of overhead applied = Predetermined overhead rate x Actual machine hours 
= $8 x 315000 
= $2520000

Therefore, the answer is D, $2520000.

At the Beginning of the Year Monroe Company Estimates Annual