Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $232,750, budgeted machine-hours were 17,500. Actual factory overhead was $227,830, actual machine-hours were 16,150.
-How much overhead would be applied to production?
A) $214,795.
B) $227,830.
C) $232,750.
D) $246,875.

Question

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $232,750, budgeted machine-hours were 17,500. Actual factory overhead was $227,830, actual machine-hours were 16,150. 
-How much overhead would be applied to production?
A) $214,795.
B) $227,830.
C) $232,750.
D) $246,875.

Quizplus · Accepted Answer

The overhead rate is calculated as budgeted overhead divided by budgeted machine-hours ($232,750 / 17,500 = $13.3 per machine-hour). Applied overhead is then calculated by multiplying the overhead rate by actual machine-hours ($13.3 * 16,150 = $214,795).

Reyes Corporation Applies Overhead Using a Normal Costing Approach Based