Asked by Emily Hines on Jun 18, 2024
Verified
Karvel Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs.For the month of August, Karvel estimated total manufacturing overhead costs at $300,000 and total machine-hours at 75,000 hours.Actual results for the period were manufacturing overhead costs of $290,000 and 75,000 machine-hours.As a result, Karvel would have:
A) applied more overhead to Work in Process than the actual amount of overhead cost for the year.
B) applied less overhead to Work in Process than the actual amount of overhead cost for the year.
C) applied an amount of overhead to Work in Process that was equal to the actual amount of overhead.
D) found it necessary to recalculate the predetermined overhead rate.
Manufacturing Overhead Costs
Indirect costs related to manufacturing, including costs associated with operating the factory outside of direct materials and labor.
Machine-Hours
The total operational hours of machinery used in the production process, often used as a basis for allocating manufacturing overhead costs.
- Comprehend the methodologies and utilization of manufacturing overhead calculations.
Verified Answer
SJ
Sarcastic JusticeJun 21, 2024
Final Answer :
A
Explanation :
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $300,000 ÷ 75,000 machine-hours = $4 per machine-hour
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
Overhead applied = $4 per machine-hour × 75,000 machine-hours = $300,000
Therefore, the amount of overhead applied was greater than the actual manufacturing overhead costs.
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
Overhead applied = $4 per machine-hour × 75,000 machine-hours = $300,000
Therefore, the amount of overhead applied was greater than the actual manufacturing overhead costs.
Learning Objectives
- Comprehend the methodologies and utilization of manufacturing overhead calculations.
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