Answer:
Under/over applied overhead= 155,000 overapplied
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= 300,000/200,000
Predetermined manufacturing overhead rate= $1.5 per direct labor dollar
<u>Now, we can allocate overhead:</u>
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1.5*260,000
Allocated MOH= $390,000
<u>Finally, the over/under application:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 235,000 - 390,000
Under/over applied overhead= 155,000 overapplied