Carlson Company uses a predetermined rate to apply overhead. At the beginning of the year, Carlson estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000. If the predetermined overhead rate is based on machine hours, what is the total plantwide applied overhead for the year?

Question

Thelma

Business

10 March, 16:58

Carlson Company uses a predetermined rate to apply overhead. At the beginning of the year, Carlson estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000. If the predetermined overhead rate is based on machine hours, what is the total plantwide applied overhead for the year?

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Helena York · Answer 1

Allocated MOH = $264,000

Explanation:

Giving the following information:

Estimates overhead costs = $240,000

Estimated machine hours = $10,000.

The actual machine hours were 11,000.

To allocate overhead based on machine-hours, first, we need to calculate the estimated overhead rate:

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

Estimated manufacturing overhead rate = 240,000/10,000 = $24 per machine-hour

Now, we can allocate overhead:

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

Allocated MOH = 24*11,000 = $264,000