At the beginning of the year, Monroe Company estimates annual overhead costs to be $1,200,000 and that 300,000 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 315,000 hours is

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as follows:

Predetermined overhead rate = Estimated overhead costs / Estimated machine hours

Predetermined overhead rate = $1,200,000 / 300,000 machine hours = $4 per machine hour

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

Overhead applied = Predetermined overhead rate x Actual machine hours

Overhead applied = $4 per machine hour x 315,000 machine hours = $1,260,000

Therefore, the correct answer is D.

At the Beginning of the Year, Monroe Company Estimates Annual