Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2,050,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2,100,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?a. $41,000 b. $820 c. $42,000 d. $840

To calculate the overhead applied to Job No. B12 based on machine hours, you can use the predetermined overhead rate.

To calculate the overhead applied to Job No. B12 using the machine hours as the activity base, you can use the predetermined overhead rate formula:

Predetermined overhead rate = Estimated annual overhead costs / Budgeted machine hours

In this case:

Estimated annual overhead costs = $2,050,000

Budgeted machine hours = 20,000

Predetermined overhead rate = $2,050,000 / 20,000 = $102.50 per machine hour

Now, to find the overhead applied to Job No. B12:

Overhead applied = Actual machine hours used on Job No. B12 × Predetermined overhead rate

Overhead applied = 1,000 hours × $102.50 per hour = $102,500

However, there seems to be a discrepancy between the provided values of annual overhead costs ($2,050,000) and the actual incurred overhead costs ($2,100,000). Assuming the actual overhead costs incurred are used, the calculation would be:

Overhead applied = Actual machine hours used on Job No. B12 × Predetermined overhead rate based on actual costs

Predetermined overhead rate based on actual costs = Actual incurred overhead costs / Budgeted machine hours

Predetermined overhead rate = $2,100,000 / 20,000 = $105 per machine hour

Overhead applied = 1,000 hours × $105 per hour = $105,000

So, considering the actual incurred overhead costs, the overhead applied to Job No. B12 would be $105,000. The closest option among those provided is:

d. $840 (This seems to be a rounding error or miscalculation based on the given options. The correct amount should be $105,000 based on the actual incurred overhead costs and machine hours used for Job No. B12.)

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