Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The company expected to incur the following:
Manufacturing overhead costs $ 650,000
Direct labor cost $ 1,300,000
Machine hours 81,250
At the end of the year, the company had incurred:
Direct labor cost $ 1,190,000
Depreciation on manufacturing plant and equipment $ 485,000
Property taxes on plant $ 21,500
Sales salaries $ 26,000
Delivery drivers' wages $ 14,500
Plant janitors' wages $ 11,000
Machine hours 54,500 hours
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 650,000/81,250= $8 per machine hour
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 8*54,500= 436,000
Total real MOH= Depreciation on manufacturing plant and equipment + Property taxes on plant + Plant janitors' wages
Total real MOH= 485,000 + 21,500 + 11,000= $517,500
Over/under allocation= real MOH - allocated MOH= 517,500 - 436,000= $81,500 underllocated
Over/under costed= (650,000 + 1,300,000) - (1,190,000 + 517,500)= 242,500 overcosted
