Graham Company applies oerhead faced on machine hours Budget

Graham Company applies oerhead faced on machine hours. Budgeted machine hours for the current period were anticipated to be 160,000 and the total budgested overhead fr the current perion was $6,400,000. A lengthy strike resulted in actual machin hours being worked of only 100,000. Acutal overhead for the year was $5,120,000. On the basis of this information, the companys year-end over-orunder applied overhead was:

Solution

Answer:

Overhead for 100,000 machine hour should be

=(6,400,000/160,000)*100,000

=4,000,0000

So Overhead Applied =4,000,0000

but actual overhead is $ 5,120,000

So overhead under applied

=$5,120,000-$4,000,000

=$1,120,000

Overhead under applied=$1,120,000