Problem:
Danner Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.
Required:
Question 1: Compute the overhead application rate.
Question 2: Compute the amount of overhead applied to production.
Question 3: Determine the amount of Over- or underapplied overhead.
Note: Please provide reasons to support your answer.