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:
Total manufacturing overhead for the year $40,000,000
Total machine hours for the year 2,000,000
Actual results for February 2009 were as follows:
Manufacturing overhead $5,480,000
Machine hours 310,000
(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 underapplied by $500,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.