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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