Question

Baker Corporation applies manufacturing overhead on an annual basis. The actual manufacturing overhead costs incurred were $210,600 and the manufacturing overhead allocated to jobs was $209,000. Calculate the manufacturing overhead and indicate whether the manufacturing overhead was overallocated or underallocated.

Answer 1

The manufactured overhead was underapplied.

Step-by-step explanation:

Giving the following information:

Actual manufacturing overhead costs incurred were $210,600.

Manufacturing overhead allocated to jobs was $209,000.

Overhead allocation is the apportionment of indirect costs to produced goods. When management has underestimated 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 - Applied Manufacturing overhead= 210600- 209000= 1600

The manufactured overhead was underapplied.