Beta Company uses a predetermined overhead rate based on machine hours to allocate manufacturing overhead to jobs.The company estimated that it would incur $600,000 of manufacturing overhead during the year and that 250,000 machine hours would be used.During the year,the company actually incurred manufacturing overhead costs of $582,000 and 240,000 machine hours were used.
By how much was manufacturing overhead overallocated or underallocated for the year?

Question

Quizplus · Accepted Answer

B)$600,000 / 250,000 = $2.40 × 240,000 = $576,000 allocated
Then $582,000 - 576,000 = $6,000 underallocated

Beta Company Uses a Predetermined Overhead Rate Based on Machine