Question

Hilltop Manufacturing uses a predetermined manufacturing overhead rate based on direct labor hours to allocate manufacturing overhead to jobs. Selected data about the​ company's operations​ follows:Actual manufacturing overhead cost$ 500 comma 700Estimated manufacturing overhead cost$ 550 comma 100Estimated direct labor cost$ 175 comma 900Estimated direct labor hours 50 comma 700Actual direct labor hours 60 comma 000Estimated machine hours 40 comma 000Actual machine hours 35 comma 300By how much was manufacturing overhead overallocated or underallocated for the​ year? (Round intermediary calculations to the nearest​ cent.)

Answer 1

Answer: $150,300 (overallocated)

Step-by-step explanation:

`Predetermined\ overhead\ rate = (Estimated\ manufacturing\ overhead)/( Estimated\ Direct\ labor\ hours)`

`Predetermined\ overhead\ rate = (550,100)/(50,700)`

= $10.85 per direct labor hour

Applied overhead = Predetermined overhead rate × Actual direct labor hours

= $10.85 × 60,000

= $651,000

Manufacturing overhead overallocated = Applied overhead - Actual manufacturing overhead cost

= $651,000 - $500,700

= $150,300