Mandela manufacturing thinks that the best activity base for its manufacturing overhead is machine hours. the estimate of annual overhead costs is $540,000. the company used 1,000 hours of processing for job a15 during the period and incurred actual overhead costs of $580,000. the budgeted machine hours for the year totaled 20,000. what amount of manufacturing overhead should be applied to job a15?

amount of manufacturing overhead should be applied to job a15 is $27000

Explanation:

given data

annual overhead costs = $540,000

machine hours used = 1000

budgeted machine hours = 20000

to find out

what amount of manufacturing overhead should be applied to job

solution

we find first pre determined overhead rate that is

pre determined overhead rate =   .......................1

put here value

pre determined overhead rate =

pre determined overhead rate = $27 per machine hour

so

manufacturing overhead is = used machine hours × pre determined overhead rate    ...................2

put here value

manufacturing overhead is = 1000 × 27

manufacturing overhead is = 27000

so amount of manufacturing overhead should be applied to job a15 is $27000

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