question 9\nelwood company applies overhead based on machine hours. at the beginning of the year, elwood…

question 9\nelwood company applies overhead based on machine hours. at the beginning of the year, elwood estimates overhead to be $760,000, machine hours to be 200,000, and direct labor hours to be 40,000. during february, elwood has 3,750 direct labor - hours and 16,000 machine hours.\nif the actual overhead for february is $58,300, what is the overhead variance, and is it over - or underapplied?\n(a) $2,500 overapplied\n(b) $2,500 underapplied\n(c) $12,950 underapplied\n(d) $12,950 overapplied\nquestion 10\nlast saved 7:35:50 pm\nquestions filter (50)\n3.5 po

question 9\nelwood company applies overhead based on machine hours. at the beginning of the year, elwood estimates overhead to be $760,000, machine hours to be 200,000, and direct labor hours to be 40,000. during february, elwood has 3,750 direct labor - hours and 16,000 machine hours.\nif the actual overhead for february is $58,300, what is the overhead variance, and is it over - or underapplied?\n(a) $2,500 overapplied\n(b) $2,500 underapplied\n(c) $12,950 underapplied\n(d) $12,950 overapplied\nquestion 10\nlast saved 7:35:50 pm\nquestions filter (50)\n3.5 po

Answer

Explanation:

Step1: Calculate the predetermined overhead rate

The formula for the predetermined overhead rate is $\text{Predetermined overhead rate}=\frac{\text{Estimated overhead}}{\text{Estimated machine - hours}}$. Given that estimated overhead is $$760,000$ and estimated machine - hours are $200,000$. So, $\text{Predetermined overhead rate}=\frac{760000}{200000}=$3.8$ per machine - hour.

Step2: Calculate the applied overhead in February

The applied overhead is calculated by multiplying the predetermined overhead rate by the actual machine - hours in February. Actual machine - hours in February are $16,000$. So, $\text{Applied overhead}=3.8\times16000 = $60,800$.

Step3: Calculate the overhead variance

The formula for overhead variance is $\text{Overhead variance}=\text{Applied overhead}-\text{Actual overhead}$. Actual overhead is $$58,300$. So, $\text{Overhead variance}=60800 - 58300=$2,500$. Since the applied overhead ($$60,800$) is greater than the actual overhead ($$58,300$), it is over - applied.

Answer:

A. $$2,500$ overapplied