Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year.The applied manufacturing overhead for the year is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $213,248
B) $157,584
C) $165,718
D) $165,963

Question

Acheson Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.  The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year.The applied manufacturing overhead for the year is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $213,248 
B) $157,584 
C) $165,718 
D) $165,963

Quizplus · Accepted Answer

To calculate the applied manufacturing overhead, we first need to determine the predetermined overhead rate. The formula for that is:

Predetermined Overhead Rate = Estimated Manufacturing Overhead / Estimated Machine-Hours

Predetermined Overhead Rate = $211,200 / 32,000 machine-hours = $6.60 per machine-hour

To calculate the applied manufacturing overhead, we use the actual machine-hours worked during the year:

Applied Overhead = Actual Machine-Hours x Predetermined Overhead Rate
Applied Overhead = 25,164 machine-hours x $6.60 per machine-hour = $165,963

Therefore, the closest answer is D) $165,963.

Acheson Corporation, Which Applies Manufacturing Overhead on the Basis of Machine-Hours