Asked by JAVARIN OTHONG on Jul 04, 2024

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Flagler Company allocates overhead based on machine hours. It estimated overhead costs for the year to be $420,000. Estimated machine hours were 50,000. Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead.​
a. Compute the overhead rate for the year.
b. What is the amount of applied overhead for the year?
c. What is the amount of under- or overapplied overhead for the year?

Overapplied Overhead

Occurs when the allocated manufacturing overhead costs are more than the actual overhead costs incurred, leading to adjustments in cost accounting records.

Overhead Rate

The ratio of indirect costs to a base activity, used to allocate overhead costs to products or job orders.

  • Compute fixed overhead rates using various allocation foundations.
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Manoo BhattJul 06, 2024
Final Answer :
a. $420,000 ÷ 50,000 = $8.40 overhead rate
b. $8.40 × 46,000 machine hours = $386,400
c. $380,000 - $386,400 = $6,400 overapplied