Flagler Company Allocates Overhead Based on Machine Hours

question 56

Essay

Flagler Company allocates overhead based on machine hours. They 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 overapplied overhead for the year? Indicate whether it is over- or underapplied.

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Definitions:

Usury Laws

Legislation that limits the amount of interest that can be charged on loans.

Low-Income Borrowers

Individuals or households with lower income who may face greater challenges or higher costs when trying to secure loans.

Economic Analysis

The systematic approach to determining the optimal use of scarce resources, involving comparison of costs and benefits.

Land Rent

The payment made for the use of land or real estate.