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Scotts Corporation allocates overhead using an approach based upon machine-hours. Budgeted factory overhead was $266,400, budgeted machine-hours included 18,500. Actual factory overhead was $287,920, and 19,050 actual machine-hours. How much manufacturing overhead should the manager allocate to the job?

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TomShelby

Answer:

allocate overhead for the job: 274,320‬

Explanation:

[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]

we calculate the predeterminated rate based on the division between the expected overhead and the expected cost driver:

expected overhead cost: 266,400

expected machine hours: 18,500

rate: 266,400 / 18,500 = 14.4

applied overhead:

machine hours for the job x rate

              19,050 x 14.4  = 274,320‬

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