Flagler Company Allocates Overhead Based on Machine Hours

question 147

Essay

Flagler Company allocates overhead based on machine hours.It estimated overhead costs for the year to be $420,000.Estimated machine hours were 50,000.Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead.
Required:
a Calculate the overhead application rate for the year.
b What is the amount of applied overhead for the year?
c What is the amount of under or over applied overhead for the year? Indicate whether it is over or under applied.

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Definitions:

Economies Of Scale

Financial advantages gained by businesses from their operational size, wherein the cost for each unit of production typically falls as the scale expands.

Industrial Organization Economics

A branch of economics that deals with the structure, behavior, and performance of industries and firms, including competition and regulation.

Competitive Advantage

The attributes or circumstances that allow a company to produce goods or services better or more cheaply than its competitors.

Structure Characteristics

The inherent attributes and qualities that define the composition and framework of an organization, system, or physical object.