Developing and Using a Predetermined Overhead Rate Developing and Using a Predetermined Overhead Rate

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

Actual results for February the year were as follows:

$($a$)$ Determine the the year predetermined overhead rate per machine hour.

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

$($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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Assume that the following predictions were made for the year 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 the year were as follows:

Manufacturing overhead $$5,480,000$

Machine hours $310,000$

$($a$)$ Determine the the year predetermined overhead rate per machine hour.

$Answer $1$

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

$Answer $2$

$($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.

$Answer $3$