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.

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(b) Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.

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(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.

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