applying factory overhead should be machine hours which is e

applying factory overhead should be machine hours, which is estmated to be 40,000 hours. The machine hours for the month of Apnil for all of the ots were 4,780. tthe atual factory overhead totaled $141,800, determine the over- or underappled amount for the month. The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for Oa $35,220 overspplied 535,220 underapplied $7,575 overspplied $7,575underapplied Previous Neot work saved Submit Test for Grading

Solution

Solution 1:

Estimated Factory Overhead = $1,250,000

Estimated Machine hours = 40,000 hours

Predetermined factory overhead rate = Estimated Factory Overhead /Estimated Machine hours  

= $1250000/ 40000 = $31.25 per Machine hour

Applied factory Overhead =Predetermined factory overhead rate* Actual machine hours = $31.25 *4780 = $149,375

Actual Factory Overhead = $141,800

Overapplied factory Overhead = $149375 -$141800 = $7,575 Overapplied

Hence Option \"c\" is correct.

Solution 2:

Job order costing and process costing are Cost Accounting systems.

Hence option \"a\" is correct.