Intercept, Inc. estimated that, for 2009, $761,250 of overhead costs would be incurred at 175,000 machine hours. During 2009, the company incurs 182,000 machine hours and has actual overhead costs of $782,630.
Required:
(a) What is Intercept’s predetermined overhead rate per machine hour for 2009?
(b) How much overhead was applied to production in 2009?
(c) Is overhead under-applied or over-applied at the end of 2009? By what amount?
(d) What is the disposition of the under-applied or over-applied overhead determined in part (c)? How, if at all, will this disposition affect the income statement?