Answer:
The correct answer is A.
Explanation:
Giving the following information:
Estimated factory overhead costs= $35,000
Estimated machine hours= 5,000
The actual hours worked on Jobs 333 and Jobs 334 total 4,980 and actual factory overhead costs are $34,700,
First, we need to calculate the estimated overhead rate:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 35,000/5,000= $7 per machine hour
Now, we can allocate overhead based on actual machine hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 7*4,980= $34,860
Finally, we determine the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 34,700 - 34,860
Under/over applied overhead= $160 overallocated
