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Question: Erickson Company applies unit-related manufacturing overhead on the basis of machine hours. The following unit-related overhead data were accumulated by the accounting department:
Estimated Actual
Machine Hours 450,000 600,000
Overhead costs $720,000 $950,000
What is the amount of over- or under applied overhead?
During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000.
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