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Reyes Corporation applies overhead using an actual costing approach. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. How much overhead would be applied to production

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Answer:

Allocated MOH= $274,320

Explanation:

Giving the following information:

Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. The actual machine-hours were 19,050.

First, we need to calculate the estimated manufacturing overhead rate. Then, we can allocate overhead.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 266,400/18,500= $14.4 per machine-hour.

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 14.4*19,050= $274,320

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