Question

For​ 2018, Franklin Manufacturing uses machineminushours as the only overhead costminusallocation base. The estimated manufacturing overhead costs are $ 340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $ 450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job​ costing? (Round interim and the final answer to the nearest​ cent.)

Answer 1

Over/under allocation= $25,000 underallocated

Step-by-step explanation:

Giving the following information:

Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base.

The estimated manufacturing overhead costs are $ 340,000 and the estimated machine hours are 40,000. The actual manufacturing overhead costs are $ 450,000 and actual machine hours are 50,000.

First, we need to determine the MOH rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base= 340000/40000= $8.5 per machine hour

Now, we can calculate the allocated MOH:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base= 8.5* 50000= $425,000

Over/under allocation= real MOH - allocated MOH= 450,000 - 425,000= 25000 underallocated