Question

Before the year​ began, Jupiter Manufacturing estimated that manufacturing overhead for the year would be​ $200,600 and that​ 25,600 direct labor hours would be worked. Actual results for the year included the​ following: Actual manufacturing overhead cost ​$182,500 Actual direct labor hours ​20,000 If the company allocates manufacturing overhead based on direct labor​ hours, the manufacturing overhead for the year would have been ? ​(Round intermediary calculations to the nearest​ cent.) A. ​$18,100 overallocated. B. ​$18,100 underallocated. C. ​$25,700 overallocated. D. ​$25,700 underallocated.

Answer 1

​$25,700 Underallocated.

Step-by-step explanation:

Calculation for the manufacturing overhead for the year

First step is to find the Predetermined overhead allocation rate using this formula

Predetermined overhead allocation rate = Manufacturing overhead/ Direct labor hours

Let plug in the formula

Predetermined overhead allocation rate=$200,600​/25,600

=7.8359375

Second step is to multiply Predetermined overhead allocation rate by Actual direct labor hours

7.84*20,000

=$156,800

Lasr step is to find the manufacturing overhead for the year

Manufacturing overhead=$182,500-$156,800

Manufacturing overhead=$25,700 Underallocated

Therefore the manufacturing overhead for the year is $25,700 Underallocated