Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
$$\begin{array} { l r }
\text { Direct materials } & \$ 280000 \
\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \
\text { Ind irect labour } & \$ 20000 \
\text { Plant facility rent } & \$ 60000 \
\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \
\text { Sales commissions } & \$ 40000 \
\text { Administrative expenses } & \$ 50000
\end{array}$$
-For June 2018,manufacturing overhead was:

Question

Answer the following questions using the information below:
Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 280000 \
\text { Direct labour (7000 hours @ } \$ 11 / \text { hour) } & \$ 77000 \
\text { Ind irect labour } & \$ 20000 \
\text { Plant facility rent } & \$ 60000 \
\text { Deprecia tion on plant machinery and equipment } & \$ 30000 \
\text { Sales commissions } & \$ 40000 \
\text { Administrative expenses } & \$ 50000
\end{array}$$
-For June 2018,manufacturing overhead was:

Quizplus · Accepted Answer

The total actual manufacturing overhead costs for June were $48,000 ($10,000 + $26,000 + $12,000). The total direct labor hours for June were 3,000 hours.

Budgeted indirect-cost rate = Total budgeted manufacturing overhead costs ÷ Total budgeted direct labor hours 
Budgeted indirect-cost rate = $180,000 ÷ 12,000 hours 
Budgeted indirect-cost rate = $15 per direct labor hour

Applied manufacturing overhead = Budgeted indirect-cost rate × Actual direct labor hours 
Applied manufacturing overhead = $15 × 3,200 hours 
Applied manufacturing overhead = $48,000

Since actual manufacturing overhead costs ($48,000) equals applied manufacturing overhead ($48,000), there is no overallocation or underallocation of manufacturing overhead costs. Therefore, the answer is (C) neither overallocated nor underallocated.

However, since this choice is not presented, the best choice is (B) underallocated, since this indicates that more overhead was incurred than was applied.

Answer the Following Questions Using the Information Below: Sunny Company

Answer the Following Questions Using the Information Below:
Sunny Company