Manufacturing overhead-over/underapplied
Response to the following problem:
Checker, Inc., produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $18.50 per machine hour was established for 2013.
Required:
a. If 12,000 machine hours were expected to be used during 2013, how much overhead was expected to be incurred?
b. Actual overhead incurred during 2013 totaled $229,400, and 12,200 machine hours were used during 2013. Calculate the amount of over- or underapplied overhead for 2013.
c. Explain the accounting necessary for the over- or underapplied overhead for the year.