Question

Fusaro Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year.
Estimated total fixed manufacturing overhead from the
beginning of the year $ 684,000
Estimated activity level from the beginning of the year 40,000 machine-hours
Actual total fixed manufacturing overhead $ 616,000
Actual activity level 37,700 machine-hours
The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:_________ (Round your intermediate calculations to 2 decimal places.)
Garrison 16e Rechecks 2017-06-28, 2017-08-01
a) $644,670
b) $684,000
c) $68,000
d) $580,580

Answer 1

Answer:

Fusaro Corporation

The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:_________

a) $644,670

Explanation:

a) Data and Calculations:

Estimated total fixed manufacturing overhead from the

beginning of the year = $684,000

Estimated activity level from the beginning of the year = 40,000 machine-hours

Predetermined overhead rate = $17.10 ($684,000/40,000) per machine hour

Actual total fixed manufacturing overhead = $616,000

Actual activity level = 37,700 machine-hours

Applied overhead during the period = Actual activity level Multiplied by the Predetermined Overhead Rate

= $644,670 (37,700 * $17.10)