Medusa products uses a job-order costing system

Reference no: EM13868034

Predetermined Overhead Rate; Applying Overhead; Underapplied or Overapplied Overhead [LO 4-1, LO 4-2, LO 4-4)

Medusa Products uses a job-order costing system. Overhead costs are applied to jobs on the basis of machine-hours. At the beginning of the year, management estimated that the company would work 85,000 machine-hours and incur $170,000 in manufacturing overhead costs for the year.

1. Compute the company's predetermined overhead rate.

2. Assume that during the year the company actually worked only 80,000 machine-hours and incurred $168,000 of manufacturing overhead costs. Compute the amount of underapplied or overapplied overhead for the year.

3. Explain why the manufacturing overhead was underapplied or overapplied for the year.

Reference no: EM13868034

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