Question

TP4.

LO 4.6If a company bases its predetermined overhead rate on 100,000 machine hours, and it actually has 100,000 machine hours, would there be an underapplied or overapplied overhead?

Answer 1

There would be no under-applied or over-applied overhead since the overhead applied will be equal to budgeted overhead.

Step-by-step explanation:

Overhead application rate is the ratio of budgeted overhead to budgeted activity level. Overhead applied is overhead application rate multiplied by actual activity level. Under/over-applied overhead is the difference between overhead applied and budgeted overhead.