Essay 2: Holt Manufacturing just completed its first year of operations. Holt produces a new type of computer accessory for storing and charging laptop computers. Planning the production levels from month to month in this new business has been a challenge. Managers and sales associates are making new business contacts and securing orders, but the sales level each month can vary. The company is located in the state of Indiana in the United States, and currently only sells to small retailers in the midwestern part of the country. The company's salesforce is working to identify new sales opportunities in areas outside of the Midwest. Sydnee Wright is the sales manager for Holt Manufacturing. Wright believes that projections for sales to increase over the next two to four years are accurate based on the planned expansion of the company's sales market. Olivia Radner is the production manager for the business. Radner is struggling to prepare production forecasts based on the volatile sales levels in the new business. Production levels are determined using forecasted sales data. Following is a summary of the results for Holt's first year of operations. Holt estimated overhead at the beginning of the year to be $300,000. Overhead is assigned based on machine hours, which were estimated to be 48,000 for the year. Actual machine hours this year were 41,000. Actual overhead incurred this year was $260,000. (Source: Retired ICMA CMA Exam Questions.) Required: P a g e 3 | 3 (1) Calculate the amount of Holt's underapplied or overapplied overhead. Show your calculations. (2) Identify and describe two different methods Holt could use to allocate this underapplied or overapplied overhead at the end of the year. (3) Identify and explain the most appropriate method to allocate this underapplied or overapplied overhead in this situation. (4) Identify and explain the impact that the underapplied or overapplied overhead has on Holt's profitability for this year. (5) Explain how activity-based costing might help Holt in future years (in few lines

Following is a summary of the results for Holt's rst year of operations. Sales $1,500,000 Unadjusted cost of goods sold 970,000 Selling and administrative expenses 528,000 Ending balances in the inventory accounts are shown below. Raw materials $40,000 Work-improeess 22,000 Finished goods 14,500