Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Actual manufacturing overhead= $340,000
Budgeted machine hours= 10,000
Budgeted direct-labor hours= 20,000
Budgeted direct-labor rate= $14
Budgeted manufacturing overhead= $364,000
Actual machine hours= 11,000
Actual direct-labor hours= 18,000
Actual direct-labor rate= $15
First, we need to calculate the predetermined overhead rate for each cost driver:
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
Machine-hours:
Estimated manufacturing overhead rate= 364,000/10,000= $36.4 per machine hour
Direct-labor hours:
Estimated manufacturing overhead rate= 364,000/20,000= $18.2 per direct labor hours
Direct-labor dollars:
Estimated manufacturing overhead rate= 364,000/(20,000*14)= $1.3 per direct labor dollar
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Machine-hours:
Allocated MOH= 36.4*11,000= $400,400
Direct-labor hours:
Allocated MOH= 18.2*18,000= $327,600
Direct-labor dollars:
Allocated MOH= 1.3*(18,000*15)= $351,000
Finally, we can determine the over/under allocation:
Over/under allocation= real MOH - allocated MOH
Direct-machine hours:
Over/under allocation= 340,000 - 400,400= $60,400 overallocated.
Direct-labor hours:
Over/under allocation= 340,000 - 327,600= $12,400 underallocated.
Direct-labor dollars:
Over/under allocation= 340,000 - 351,000= $11,000 overallocated
