Reference no: EM132132797

Question - At the beginning of the year, management had estimated that total manufacturing overhead would be $591,360 and had planned to apply overhead to jobs based on an estimated use 42,240 of machine hours. The actual number of machine hours used during the year was 42,800, and actual manufacturing overhead cost for the year was $627,200.

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated machine hour

Predetermined overhead rate = 591360/42240

Predetermined overhead rate = $ 14 per machine hour

Overhead was applied to jobs during the year = Predetermined overhead rate*Actual Machine hour

Overhead was applied to jobs during the year = 14*42800

Overhead was applied to jobs during the year = 599200

By how much is overhead under- or overapplied?