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.)

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