Developing and Using a Predetermined Overhead Rate

Assume that the following predictions were made for 2009 for one of the plants of Milliken & Company:

Total manufacturing overhead for the year$42,000,000Total machine hours for the year2,000,000

Actual results for February 2009 were as follows:

Manufacturing overhead$5,480,000Machine hours310,000

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Developing and Using a Predetermined Overhead Rate Assume that the following predictions were made for 2009 for one of the plants of Milliken & Company: Total manufacturing overhead for the year $42,000,000 Total machine hours for the year 2,000,000 Actual results for February 2009 were as follows: Manufacturing overhead $5,480,000 Machine hours 310,000 (a) Determine the 2009 predetermined overhead rate per machine hour. $ 22 X (b) Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February. $ 2,000,000 X (c) As of February 1, actual overhead was underapplied by $500,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February. $ 840,000 X