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Beltran Corporation produces wooden and aluminum baseball bats. In preparing the current budget, Beltran’s management estimated a total of $1,050,000 in manufacturing overhead costs and 15,000 machine hours for the coming year. In December, Beltran’s accountants reported actual manufacturing overhead incurred of $584,000 and 14,400 machine hours used during the year. Beltran applies overhead based on machine hours.

What was Beltran’s predetermined overhead rate for the year?

How much manufacturing overhead did Beltran apply during the year?

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Instructions are listed below.

Explanation:

Giving the following information:

Beltran’s management estimated a total of $1,050,000 in manufacturing overhead costs and 15,000 machine hours for the coming year.

Actual machine hours= 14,400

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 1,050,000/15,000= $70 per machine hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 70*14,400= $1,008,000

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