Answer:
As overhead was underapplied, the balance in overhead will be $33,000 credit.
Explanation:
<u>First, we need to calculate the predetermined overhead rate:</u>
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Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 452,000 / 2,260,000
Predetermined manufacturing overhead rate= $0.2 per direct labor dollar
<u>Now, we can allocate costs:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 0.2*1,930,000
Allocated MOH= $386,000
<u>Finally, we determine the over/under allocation:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 419,000 - 386,000
Underapplied overhead= $33,000
As overhead was underapplied, the balance in overhead will be $33,000 credit.
