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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?

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Solution Summary

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

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 - ...

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