Vaughn manufacturing thinks machine hours is the best activity base for its manufacturing overhead. the estimate of annual overhead costs for its jobs was $195. the company used 1000 hours of processing on job no. b12 during the period and incurred overhead costs totaling $2. the budgeted machine hours for the year totaled 2. how much overhead should be applied to job no. b12?

$ 97,500

Explanation:

Data provided:

The estimate of annual overhead costs for jobs = $ 1,950,000

Number of hours used for the Job No. B12 = 1000 hours

Total overhead costs incurred = $ 2,000,000

Total budgeted machine hours for the year = 20000

Now,

The overhead application rate is calculated as:

= (estimate of annual overhead costs)/(Total budgeted machine hours for the year)

on substituting the values, we get

The overhead application rate = $ 1,950,000 / 20000 = $ 97.5 / hr

Therefore, for 1000 hours of processing

total overhead applied = The overhead application rate × 1000

or

Overhead to be applied to Job No. B12 = $ 97.5 / hr × 1000 = $ 97,500

aok hold on