Showboat Corporation had actual manufacturing overhead costs for the most recent year of $30,400. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $3.25 per direct labor hour. Direct labor cost is $26 per hour. At the end of the year, Cabaret Corporation found it had overallocated manufacturing overhead by $1850. How much manufacturing overhead was allocated in total during the year?

Question

Quizplus · Accepted Answer

To find out how much manufacturing overhead was allocated in total during the year, we need to first find out the total amount of direct labor hours used during the year. We can do this by dividing the actual manufacturing overhead costs by the predetermined overhead rate:

$30,400 / $3.25 per hour = 9,344 hours

Next, we can calculate the amount of manufacturing overhead that was actually applied to jobs by multiplying the direct labor hours by the predetermined overhead rate:

9,344 hours x $3.25 per hour = $30,380

This means that $30,380 was allocated to jobs during the year. However, we know that Cabaret Corporation overallocated by $1,850, which means they allocated more overhead than they actually incurred. To adjust for this, we need to subtract the overallocated amount from the allocated amount:

$30,380 - $1,850 = $28,530

Therefore, the total amount of manufacturing overhead that was allocated during the year is $28,530. The closest answer choice is C, $32,250, but that is not the correct answer.

Showboat Corporation Had Actual Manufacturing Overhead Costs for the Most