The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours. If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?
A)$9,792 Overapplied
B)$1,344 Overapplied
C)$9,792 Underapplied
D)$1,344 Underapplied

Question

The management of Chaloux Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours.  If the company bases its predetermined overhead rate on capacity,by how much was manufacturing overhead underapplied or overapplied?
A)$9,792 Overapplied 
B)$1,344 Overapplied 
C)$9,792 Underapplied 
D)$1,344 Underapplied

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead at capacity F1F1F1S1F1F1F10 Estimated total amount of the allocation base at capacity = $57,120 F1F1F1S1F1F1F10 21,000 machine-hours = $2.72 per machine-hour
 11eaa48f_7bea_b796_9e4a_d925a0b5f0f2_TB2485_00

The Management of Chaloux Corporation Would Like to Investigate the Possibility