Erca, Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $15.00 per machine hour was established for 2016.(a.) If 9,000 machine hours were expected to be used during 2016, how much overhead was expected to be incurred?
(b.) Actual overhead incurred during 2016 totaled $135,000, and 9,200 machine hours were used during 2016. Calculate the amount of over- or underapplied overhead for 2016.(c.) Explain the accounting necessary for the over- or underapplied overhead for the year.

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The Answer of Erca, Inc. produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $15.00 per machine hour was established for 2016.(a.) If 9,000 machine hours were expected to be used during 2016, how much overhead was expected to be incurred?
(b.) Actual overhead incurred during 2016 totaled $135,000, and 9,200 machine hours were used during 2016. Calculate the amount of over- or underapplied overhead for 2016.(c.) Explain the accounting necessary for the over- or underapplied overhead for the year.

Erca, Inc Produces Automobile Bumpers