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The company you work for uses machine hours as an allocation base to allocate overhead to jobs. You also collect the following information:

The company you work for uses machine hours as an allocation base to allocate overhead to jobs. You also collect the following information:








Estimated use                       47,500m-h

Practical capacity                       50,000m-h

Actual usage                       46,850m-h

Fixed manufacturing overhead* $           1,258,400


 *All manufacturing overhead is fixed











Machine hours required for  Job X
55m-h









1) Using estimated amount of the allocation base, calculate:
a) predetermined overhead rate


b) overhead would be applied to Job X


c) underapplied or overapplied overhead










2) Using practical capacity amount of the allocation base, calculate:
a) predetermined overhead rate


b) overhead would be applied to  Job X


c) underapplied or overapplied overhead










3) Explain why underapplied/overapplied overhead is different under the two methods.


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