Chapter 4 Exercise 7

1. Overhead application: Working backward

   The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following divisional information is presented for your review:

Division A Division B Actual machine hours 22,500 ? Estimated machine hours 20,000 ? Overhead application rate Actual overhead 110,000 ? Estimated overhead ? 90,000 Applied overhead ? 86,000 Over- (under-) applied overhead

Division A:

Estimated Overhead Estimated Machine Hours * Overhead Application Rate

Estimated Overhead 20,000 *

Estimated Overhead

90,

Applied Overhead Actual Machine Hours * Overhead Application Rate

Applied Overhead 22,500 *

Applied...