Checker Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting

Question:

Checker Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $12.70 per machine hour was established for 2019.


Required:

a. If 9,000 machine hours were expected to be used during 2019, how much overhead was expected to be incurred?

b. Actual overhead incurred during 2019 totaled $121,650, and 9,100 machine hours were used during 2019. Calculate the amount of over- or underapplied overhead for 2019.

c. Explain the accounting necessary for the over- or underapplied overhead for the year.

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Related Book For  book-img-for-question

Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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