Answer:
Under/over allocation= $6,850 overallocated
Explanation:
Giving the following information:
The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours are 153,000 and estimated factory overhead is $1,208,700.
The following information is for September:
Direct labor hours: Job X 9,000 Job Y 7,500
Labor costs incurred: Direct labor ($8.00 per hour) $ 132,000
Manufacturing overhead costs:
Indirect labor 56,000
Factory supervisory salaries 13,100
Rental costs:
Factory $ 11,300
Total equipment depreciation costs:
Factory $ 12,400
Indirect materials used $ 30,700
Total= 123,500
First, we need to determine the manufacturing overhead rate:
manufacturing overhead rate= total estimated manufacturing overhead/ total amount of allocation base
manufacturing overhead rate= 1208700/ 153000= $7.9 per direct labor hour
Allocated overhead= manufacturing overhead rate* actual allocation base= 7.9* 16500 hours= $130,350
Under/over allocation= real overhead - allocated overhead
Under/over allocation= 123500 - 130350= 6850 overallocated
