Question

The following information is available from the records of a manufacturing company that applies factory overhead based on direct labor hours: Estimated overhead cost: $500,000 Estimated labor hours: $200,000 Actual overhead cost: $515,000 Actual labor hours: $210,000 Based on this information, factory overhead is

Answer 1

Answer:

The manufactured overhead was under-estimated.

Explanation:

Giving the following information:

The actual manufacturing overhead costs incurred were $515,000.

Estimated Manufacturing overhead was $500,000.

Overhead allocation is the distribution of indirect costs to produced goods. When the administration has undervalued and under-funded the amount of money needed for non-production costs, they have under-allocated overhead.

Over applied manufacturing overhead:

Applied overhead>Actual overhead

Under applied manufacturing overhead:

Applied overhead<Actual overhead

In this exercise:

Actual manufacturing overhead - Estimated Manufacturing overhead= 515000- 500000= 15000

The manufactured overhead was under-estimated.