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Beta Fish Corporation uses a predetermined overhead rate based on direct labor hours to allocate manufacturing...

Beta Fish Corporation uses a predetermined overhead rate based on direct labor hours to allocate manufacturing overhead to jobs. The company estimated that it would incur​ $600,500 of manufacturing overhead during the year and that​ 150,700 direct labor hours would be worked. During the​ year, the company actually incurred manufacturing overhead costs of​ $582,300 and​ 135,300 direct labor hours were worked.

By how much was manufacturing overhead overallocated or underallocated for the​ year? (Round intermediary calculations to the nearest cent and the final answer to the nearest​ dollar.)

A. $18,200 underallocated

B.​$18,200 overallocated

C. $43,806 underallocated

D.​$43,806 overallocated

Solutions

Expert Solution

Pre determined O/H rate = $ 600500 / 150700 = 3.98 / direct labour hour

Actual Hours worked = 135300

O/H absorbed = 135300 * 3.98 = $ 539135

Actual O/H incurred = $ 582300

Here clearly there is underallocation to the extent of = $ 582300 - $ 539135 = $ 43165

The correct option is C

(difference between 43165 and 43806 is ignored)

ekkarill92 answered 2 years ago
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