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26 October, 08:50

Green Company expected to incur $ 10 comma 500 in manufacturing overhead costs and use 5 comma 000 machine hours for the year. Actual manufacturing overhead was $ 9 comma 800 and the company used 5 comma 300 machine hours. 9. Calculate the predetermined overhead allocation rate using machine hours as the allocation base. 10. How much manufacturing overhead was allocated during the year?

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  1. 26 October, 08:54
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    Estimated manufacturing overhead rate = 10,500/5,000 = $2.1 per machine hour

    Allocated MOH = $11,130

    Explanation:

    Giving the following information:

    Estimated overhead costs = $10,500

    Estimated machine-hours = 5,000

    Actual machine-hours = 5,300 machine hours.

    To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

    Estimated manufacturing overhead rate = 10,500/5,000 = $2.1 per machine hour

    Now, we can allocate overhead based on actual machine-hours:

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

    Allocated MOH = 2.1*5,300 = $11,130
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