4 Change the estimated total amount of the allocation base b

4. Change the estimated total amount of the allocation base back to 72,000 machine-hours, so that the data area of you worksheet looks exactly the same as in Requirement 2. Now change the actual manufacturing overhead cost from $480,800 to $488,800. The data area of your worksheet should now look like this: 4 Allocation base Machine-hours Estimated manufacturing overhead cost Estimated total amount of the allocation base Actual manufacturing overhead cost Actual total amount of the allocation base $468,000 72,000 machine- hours $488,800 78,000 machine- hours (a)By how much is the manufacturing overhead underapplied or overapplied? manufacturing overhead (b)Why is the amount of underapplied (overapplied) manufacturing overhead different from Requirement 2 above? (Select all that apply.) The predetermined overhead rate changed The change in the actual manufacturing overhead cost directly resulted in a omparable change in the amount of underapplied (overapplied) manufacturing overhead The change in the estimated total amount of the allocation base affected the amount of manufacturing overhead applied

Solution

Predetermined OH rate = 468000/72000 = $                  6.50 Overhead applied = 78000*6.50 = $         5,07,000 Actual overhead $         4,88,800 a) Overapplied manufacturing overhead = 507000-488800 = $             18,200 b) The change in the actual manufacturing overhead cost directly resulted in a ……………………………………….applied.