Ikerd Company applies manufacturing overhead to jobs on the

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $339,292 for the year, and machine usage is estimated at 125,200 hours.

For the year, $436,375 of overhead costs are incurred and 132,500 hours are used.

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Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $339,292 for the year, and machine usage is estimated at 125,200 hours. For the year, $436,375 of overhead costs are incurred and 132,500 hours are used.

Solution

A.

manufactuing overhead rate of the year

overhead cost/machine usage = 339292/125200 = 2.71

B.

amount of under- or overapplied overhead = 436375 - 2.71*132500 = 77300

(using actual usage)