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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. 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
Expert Solution
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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