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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Business

Kamari Arroyo

14 March, 20:58

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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Answers (1)

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Warren Padilla · Answer 1

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.