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Poole Company applies manufacturing overhead (MOH) using a pre-determined overhead rate (POHR) based on machine hours (MHs) with the following information for the period:
MHs estimated for the period 250,000
MHs actually incurred in the period 258,000
POHR for the period $ 5.50 per MH
Actual MOH for the period $ 1,410,000
The activity for the period was significantly less than Poole's capacity of 275,000 MHs, and so the CEO has asked about the impact of using a POHR based on capacity. If this is done, how much lower will the company's applied MOH be versus the traditional method?
A. $ 87,720
B. $ 129,000
C. $ 96,164
D. $ 85,000
E. None of the above
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