2 Change all of the numbers in the data area of your workshe

2. Change all of the numbers in the data area of your worksheet so that it looks 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 $480,800 78,000 machine- hours If your formulas are correct, you should get the correct answers to the following questions (a)What is the predetermined overhead rate? (Round your answer to 2 decimal places.) Predetermined overhead rate per machine- hour (b)By how much is the manufacturing overhead underapplied or overapplied? manufacturing overhead

Solution

(a) Pre-determined overhead rate = Estimated manufacturing overhead cost/Estimated machine hours

= 468,000/72,000

= $6.50

(b)

Actual overhead rate = Actual manufacturing overhead cost/Actual machine hours

= 480,800/78,000

= $6.16

Overapplied overhead = Estimated overhead rate - Actual overhead rate

Hence, manufacturing overhead has been overapplied by = 6.50 - 6.16

= $0.34