C.M.Fly, owner of Falcon Aircraft Co., is preparing the accounting record for the year just ended.During the year, he had projected that the company would produce 300 Falcon Aircraft for its clients with a factory overhead cost of $150,000,000.However, business was better than expected and the company was able to produce 400 aircraft at factory overhead cost of $175,000,000.What is the amount per unit that Falcon Aircraft has over or underapplied factory overhead?

Question

Quizplus · Accepted Answer

The estimated overhead per Falcon Aircraft is $500,000 ($150,000,000/300). The actual overhead per Falcon Aircraft is $437,500 ($175,000,000/400). The difference between the estimated and actual overhead per Falcon Aircraft is $62,500 ($500,000 - $437,500). Since the actual overhead per Falcon Aircraft is less than the estimated overhead per Falcon Aircraft, Falcon Aircraft has overapplied factory overhead by $62,500.

CMFly, Owner of Falcon Aircraft Co