Compute the companys predetermined overhead rate


Question:

Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that the company would work 85,600 machine-hours and incur $196,880 in manufacturing overhead costs for the year.

Required:

1. Compute the company's predetermined overhead rate. (Round your answer to 2 decimal places.)

2. Assume that during the year the company actually worked only 80,300 machine-hours and incurred $194,000 of manufacturing overhead costs. Compute the amount of underapplied or overapplied overhead for the year. (Round your intermediate calculation to 2 decimal places.)

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Accounting Basics: Compute the companys predetermined overhead rate
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