Caterpillar Inc. uses a plant-wide overhead rate based on machine hours. The following data is provided:
•Estimated machine hours: 100,000 hours
•Estimated manufacturing overhead: $500,000
•Actual machine hours: 110,000 hours
•Actual manufacturing overhead: $550,000
Required:
1.Calculate the predetermined overhead rate.
2.Determine the applied overhead.
3.Calculate the overapplied or underapplied overhead and its impact on financial statements.