Answer the following questions using the information below:
For 2014, Thomas Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $300,000 and estimated machine hours are 50,000. The actual manufacturing overhead costs are $420,000 and actual machine hours are 70,000.
-What is the difference between the budgeted and the actual manufacturing overhead using job costing?
A) $0.20
B) $0.50
C) $1.00
D) $1.20

Question

Quizplus · Accepted Answer

The budgeted overhead rate is $300,000 / 50,000 hours = $6 per machine hour. The actual overhead rate is $420,000 / 70,000 hours = $6 per machine hour. The difference between the budgeted and actual overhead rates is $0, so the difference in total overhead is $420,000 - $300,000 = $120,000. Dividing this by the actual machine hours (70,000) gives $1.00 per machine hour.

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