Answer:
Results are below.
Explanation:
Giving the following information:
Estimated Value Actual Value
Manufacturing overhead cost $732,000 $842,000
Direct labor hours 14,640 hours 16,600 hours
<u>To calculate the predetermined manufacturing overhead rate we need to use the following formula:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 732,000 / 14,640
Predetermined manufacturing overhead rate= $50 per direct labor hour
<u>Now, we can allocate overhead:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 50*16,600
Allocated MOH= $830,000
<u>Finally, the over/under allocation:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 842,000 - 830,000
Underapplied overhead= $12,000
