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Boohoohoo Inc. uses a job order costing system. The estimated manufacturing overhead for the year is $12,000,000. The company has decided to allocate the manufacturing overhead to products on the basis of machine hours. The estimated machine hours for the year are 1,000,000 hours.
At the end of the year Boohoohoo produced over 750 different jobs. Actual manufacturing overhead costs amounted to $12,100,000 instead of the $12,000,000 estimated at the beginning of the year. The actual machine hours amounted to 980,000 hours instead of the 1,000,000 hours estimated at the beginning of the year. Problem 1: How much fixed manufacturing overhead was applied to all 750+ jobs? Problem 2: Was the manufacturing overhead over or under applied? Problem 3: By how much was the manufacturing overhead over or under applied?
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