Question

Kisler Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted manufacturing overhead $ 70,035 Budgeted production (a) 15,000 units Standard hours per unit (b) 0.70 machine-hours Budgeted hours (a) × (b) 10,500 machine-hours Actual production (a) 14,000 units Standard hours per unit (b) 0.70 machine-hours Standard hours allowed for the actual production (a) × (b) 9,800 machine-hours Total actual manufacturing overhead $ 97,489 The total amount of manufacturing overhead applied is closest to:

Answer 1

Budgeted Hours = Budgeted units * std hours per unit

=15000 units *0.70 hours per unit

=10500 Hours

Predetermined Overhead Rate per hour = Budgeted Overhead / budgeted Hours

=$70035/10500

=$6.67 per hour

manufacturing overhead applied = Standard hours allowed for the actual production *predetermined overhead rate per hour

=9800 hours *$6.67

=

$       65,366