Question

​​Lakeside, Inc. estimated manufacturing overhead costs for the year at $371,000​, based on 180,000 estimated direct labor hours. Actual direct labor hours for the year 190,000. The manufacturing overhead account contains debit entries totaling $391,000. The Manufacturing Overhead for the year was​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

A.

$39,526 overallocated

B.

$39,526 underallocated

C.

$400 underallocated

D.

$400 overallocated

Answer 1

D.$400 over allocated

Step-by-step explanation:

For computing the over-allocated or under-allocated amount, first, we have to determine the predetermined overhead rate which is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

= $371,000 ÷ 180,000 hours

= $2.06

Now we have to find the actual overhead which equals to

= Actual direct labor-hours × predetermined overhead rate

= 190,000 hours × $2.06

= $391,400

So, the ending overhead equals to

= Actual manufacturing overhead - actual overhead

= $391,000 - $391,400

= $400 over - applied