Question

View Policies Current Attempt in Progress Bonita Industries 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: Estimated annual overhead cost $2500000 Actual annual overhead cost $2470000 Estimated machine hours 100000 Actual machine hours 95000 $2500000 applied and $95000 overapplied $2375000 applied and $95000 underapplied $2470000 applied and neither under- nor ov

Answer 1

Answer:

The overhead applied and the under- or over application of overhead for the period is $2,375,000 and $95,000 respectively

Explanation:

The computation of the overhead applied and the under- or over application of overhead for the period is shown below:

Overhead applied = (Estimated annual overhead cost ÷ Estimated machine hours) × Actual machine hours

                            = ($2,500,000 ÷ 100,000 machine hours) × 95,000 machine hours

                            = $2,375,000

So, the over applied overhead =  Actual annual overhead cost -  Overhead applied

= $2,470,000 - $2,375,000

= $95,000