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15 January, 07:04

Baker Corporation applies manufacturing overhead on an annual basis. The actual manufacturing overhead costs incurred were $210,600 and the manufacturing overhead allocated to jobs was $209,000. Calculate the manufacturing overhead and indicate whether the manufacturing overhead was overallocated or underallocated.

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  1. 15 January, 09:16
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    The manufactured overhead was underapplied.

    Explanation:

    Giving the following information:

    Actual manufacturing overhead costs incurred were $210,600.

    Manufacturing overhead allocated to jobs was $209,000.

    Overhead allocation is the apportionment of indirect costs to produced goods. When management has underestimated and under-funded the amount of money needed for non-production costs, they have under-allocated overhead.

    Over applied manufacturing overhead:

    Applied overhead>Actual overhead

    Under applied manufacturing overhead:

    Applied overhead
    In this exercise:

    Actual manufacturing overhead - Applied Manufacturing overhead = 210600 - 209000 = 1600

    The manufactured overhead was underapplied.
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