Answers
1
Estimated manufacturing overhead costs = $580,000
Estimated machine hours = 72,500
| Estimated manufacturing overhead costs | / | Estimated machine hours | = | Predetermined overhead rate |
| 580,000 | / | 72,500 | = | $8 per machine hour |
2.
Manufacturing overhead allocated = Actual machine hours x Predetermined overhead rate
= 55,500 x 8
= $444,000
3.
Actual manufacturing overhead costs = Depreciation on equipment + Property taxes on plant + Plant janitors wages
= 500,000+19,000+8,000
= $527,000
Under applied allocated overhead = Actual manufacturing overhead - Applied manufacturing overhead
= 527,000-444,000
= $83,000
4.
Job were under costed by $83,000.
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