Answer:
The correct answer is A.
Explanation:
Giving the following information:
The company estimated manufacturing overhead at $510,000 for the year and direct labor-hours at 100,000 hours.
The actual manufacturing overhead costs incurred during the year totaled $520,000. Actual direct labor-hours were 105,000.
First, we need to calculate the estimated overhead rate. After, we need to allocate overhead. Finally, we will calculate the over/under allocation.
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= 510,000/100,000= $5.1 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5.1*105,000= $535,500
Over/under allocation= real MOH - allocated MOH
Over/under allocation= 520,000 - 535,500= $15,500 overallocated
