Question

Poland's Paints allocates overhead based on machine hours. Selected data for the most recent year follow.Estimated MOH $238,000Actual MOH $244,000Estimated machine hrs 20,000Actual machine hrs 22,500The estimates were made as of the beginning of the year, while the actual results were for the entire year. The amount of manufacturing overhead allocated for the year based on machine hours would have been:(a) $267,750(b) $241,000(c) $238,000(d) $244,000

Answer 1

Answer:

(a) $267,750

Explanation:

The computation of allocation of the manufacturing overhead is computed by applying the formula which is shown below:

= (Estimated manufacturing overhead ÷ estimated machine hours) × (actual machine hours)

= ($238,000 ÷ 20,000 machine hours) × $22500 machine hours

=  $267,750

We calculate the manufacturing overhead allocation based on estimated machine hours not from the actual machine hours