Level of Activity
June July August
Machine hours 46,500 62,000 51,150
Total factory overhead costs $ 214,700 $ 236,400
The factory overhead costs above consist of indirect materials, rent and maintenacne. The company has analyzed theses costs at the 46,500 machine hours level of activity as follows:
Indirect material (variable) $51,150
Rent (fixed) $123,000
Maintenance (mixed) $ 40,550
Total factory overhead costs $ 214,700
Platinum (above) is considering using a predetermined overhead rate based on capacity
capacity of the factory 64,000 Machine hours
Masnufacturing OH cost at the capacity $ 256,000
If Platinum used the capacity based predetermined rate to apply manufacturing overhead cost, calculate the over or
under-applied overhead cost for the month of July: