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10 November, 11:55

Hilltop Manufacturing uses a predetermined manufacturing overhead rate based on machine hours to allocate manufacturing overhead to jobs. Selected data about the company's operations follows: Actual manufacturing overhead cost $500,000 Estimated manufacturing overhead cost $550,000 Estimated direct labor cost $175,800 Estimated direct labor hours 50,500 Actual direct labor hours 60,700 Estimated machine hours 40,600 Actual machine hours 35,800 By how much was manufacturing overhead overallocated or underallocated for the year? (Round intermediary calculations to the nearest cent.)

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  1. 10 November, 15:38
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    Under-allocation of manufacturing overhead is $15,024.63

    Explanation:

    Actual manufacturing overhead cost $500,000

    Estimated manufacturing overhead cost $550,000

    Estimated direct labor cost $175,800

    Estimated direct labor hours 50,500

    Actual direct labor hours 60,700

    Estimated machine hours 40,600

    Actual machine hours 35,800

    Predetermined Rate of Allocation = Estimated manufacturing overhead cost / Estimated machine hours

    Predetermined Rate of Allocation = $550,000 / 40600

    Predetermined Rate of Allocation = $13.54679803 / hour

    Allocated Manufacturing overheads = Predetermined overhead rate x Actual Machine hours

    Allocated Manufacturing overheads = $13.54679803 x 35,800

    Allocated Manufacturing overheads = $484,975.37

    Under / over allocation of manufacturing overhead = Actual manufacturing overhead - Allocated manufacturing overhead

    Under / over allocation of manufacturing overhead = 500,000 - $484,975.37

    Under-allocation of manufacturing overhead = $15,024.63
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