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Homework answers / question archive / Reyes Corporation applies overhead using a normal costing approach based upon machine-hours

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours

Accounting

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $267552, budgeted machine-hours were 18580. Actual factory overhead was $288320, actual machine-hours were 19130.

How much overhead would be applied to production? Please explain.

 

Multiple choice:

a) 267552

b) 274720

c) 279995

d) 288320

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Answer

So, Overhead applied to production is $275,472 which is not given in options. May be there is some mistake in options.

Explanation

Computation of Applied Overhead:
Budgeted overhead rate = $267,552/18,580 = $14.40
So, Budgeted Overhead Rate is $14.40 per Machine hour.
 
 
Applied overhead = Budgeted Overhead Rate * Actual Machine Hours
= $14.40*19,130

Applied overhead = $ 275,472

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