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31 January, 20:03

Blakely charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of machine hours. The following data pertain to the current year: Budgeted manufacturing overhead: $480,000 Actual manufacturing overhead: $440,000 Budgeted machine hours: 20,000 Actual machine hours: 16,000 Overhead applied to production totaled:Select one:a. $352,000b. $384,000c. $550,000d. $600,000e. some other amount

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  1. 31 January, 20:21
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    The correct answer is B: $384,000

    Explanation:

    Giving the following information:

    Blakely charges manufacturing overhead to products by using a predetermined application rate computed based on machine hours.

    The following data pertain to the current year:

    Budgeted manufacturing overhead: $480,000

    Actual manufacturing overhead: $440,000

    Budgeted machine hours: 20,000

    Actual machine hours: 16,000

    First, we need to calculate the manufacturing overhead rate:

    manufacturing overhead rate = total estimated manufacturing overhead / total amount of allocation base

    manufacturing overhead rate = 480000/20000 = 424 per hour

    Allocated manufacturing overhead = overhead rate*actual hours = 24*16000 = 384,000
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