Question:
Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2009 for one of the plants of Milliken & Company:
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Total manufacturing overhead for the year
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$44,000,000
|
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Total machine hours for the year
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2,000,000
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Actual results for February 2009 were as follows:
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Manufacturing overhead
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$5,480,000
|
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Machine hours
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310,000
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(a) Determine the 2009 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 under applied by $500,000. Determine the cumulative amount of any over applied or under applied overhead at the end of February.