Island corporation applies overhead based upon machine-hours. budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. actual factory overhead was $387,920 and actual machine-hours were 13,150.
required:
a. compute the overhead application rate.
b. compute the amount of overhead applied to production.
c. determine the amount of over- or underapplied overhead.

Instructions are listed below.

Explanation:

Giving the following information:

Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 375,000/12,500= $30 per machine hour

B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 30*13,150= $394,500

C) Over/under allocation= real MOH - allocated MOH

Over/under allocation= 387,920 - 394,500= 6,580 overallocated

answerimplicit;