Question

​Lakeside, Inc. estimated manufacturing overhead costs for the year at $377,000​, based on 180,000 estimated direct labor hours. Actual direct labor hours for the year totaled 196,000. 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. $18,640 underallocated

Answer 1

$18,640 over - applied

Step-by-step explanation:

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

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

= $377,000 ÷ 180,000 hours

= $2.09

Now we have to find the actual overhead i.e.

= Actual direct labor-hours × predetermined overhead rate

= 196,000 hours × $2.09

= $409,640

So, the ending overhead equals to

= Actual manufacturing overhead - actual overhead

= $391,000 - $409,640

= $18,640 over - applied