Barnes Company applies overhead on the basis of machine hours. Given the following data compute overhead applied and the under- or overapplication of overhead for the period: 11eb1392_1b8d_9aa1_8021_f18e64fdb092

Question

Quizplus · Accepted Answer

The question does not provide the actual overhead cost or the actual machine hours used, so we cannot calculate the predetermined overhead rate. Therefore, we cannot calculate the amount of overhead that should have been applied. However, based on the given data, we know that overhead was applied based on machine hours. The total machine hours used during the period is 590,000 hours. If the predetermined overhead rate was $5 per machine hour, then the overhead applied would be $2,950,000 (= $5 x 590,000). Since overhead applied is less than the actual overhead cost, there is an underapplication of overhead. The amount of underapplied overhead is $20,000 (= actual overhead cost - overhead applied = $2,970,000 - $2,950,000). Therefore, the best choice is C.

Barnes Company Applies Overhead on the Basis of Machine Hours