Answer:
Under/over applied overhead= $70,000 overapplied
Explanation:
Giving the following information:
Job No. 59:
$600,000 of overhead
$400,000 in labor.
Raymond applied overhead based on direct labor cost.
Actual production required an overhead cost of $590,000, and $440,000 in labor.
F<u>irst, we need to calculate the predetermined overhead rate:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 600,000/400,000
Predetermined manufacturing overhead rate= $1.5 per direct labor dollar
<u>Now, we can allocate overhead:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1.5*440,000
Allocated MOH= $660,000
<u>Finally, the over/under allocation:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 590,000 - 660,000
Under/over applied overhead= $70,000 overapplied
