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 $4.50 $5.00
- Actual overhead $110,000 ?
- Estimated overhead ? $90,000
- Applied overhead ? $86,000
- Over- (under-) applied overhead ? $6,500