Collossal Company uses a predetermined rate to apply overhead. At the beginning of the year, Collossal estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000. If the predetermined overhead rate is based on machine hours, what is the total amount credited to the factory overhead account for the year for Collossal?
A) $249,280
B) $246,000
C) $240,000
D) $264,000

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated overhead costs / Estimated machine hours
= $240,000 / 10,000 = $24 per machine hour
Total overhead applied = Predetermined overhead rate x Actual machine hours
= $24 x 11,000 = $264,000
Therefore, the answer is D.

Collossal Company Uses a Predetermined Rate to Apply Overhead