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    Applied and estimated overhead

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    APPLIED OVERHEAD IN A BANK
    Estimated bank production capacity 800,000,000
    Predetermined overhead rate (based on estimated production capacity) $0.01 per transaction
    (one unit = one transaction)

    Quarter Actual Units of Production
    1 200,000,000
    2 200,000,000
    3 200,000,000
    4 100,000,000

    Compute the amount of total overhead applied under normal costing for each quarter.
    What was the estimated overhead for the year for the predicted capacity of 800 million units?

    © BrainMass Inc. brainmass.com June 3, 2020, 11:13 pm ad1c9bdddf
    https://brainmass.com/business/accounting/applied-estimated-overhead-269274

    Solution Preview

    In normal costing, the overhead is applied based on a predetermined rate. The predetermined rate is $0.01 per transaction.
    We are given the transactions in each quarter
    Quarter 1 - ...

    Solution Summary

    The solution explains how to calculate the amount of applied and estimated overhead.

    $2.19

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