PNG Corporation designs and builds roller coasters for amusement parks. At the end of 20x1, managers estimated overhead costs for 20x2 of $150,000 based on expected production of 5 roller coasters using 5,000 labour hours each. Actual overhead costs for 20x2 were $170,000. PNG actually designed and built 6 roller coasters with the following direct labour usage and overhead costs:
Overhead Cost Labour Hours
The Big Dipper $28,000 3,500
The Ultimate Scream 35,000 4,000
Loop Me 27,000 5,000
The Screaming Chicken 40,000 2,500
You Don't Know Coasters 25,000 6,000
Old Faithful 15,000 4,500
Assume PNG uses a normal costing system with the number of labour hours as the overhead allocation base.
a)Calculate the allocation rate for 20x2.
b)Calculate the total corporate over- or underapplied overhead (specify which)for 20x2.

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The Answer of PNG Corporation designs and builds roller coasters for amusement parks. At the end of 20x1, managers estimated overhead costs for 20x2 of $150,000 based on expected production of 5 roller coasters using 5,000 labour hours each. Actual overhead costs for 20x2 were $170,000. PNG actually designed and built 6 roller coasters with the following direct labour usage and overhead costs:
Overhead Cost Labour Hours
The Big Dipper $28,000 3,500
The Ultimate Scream 35,000 4,000
Loop Me 27,000 5,000
The Screaming Chicken 40,000 2,500
You Don't Know Coasters 25,000 6,000
Old Faithful 15,000 4,500
Assume PNG uses a normal costing system with the number of labour hours as the overhead allocation base.
a)Calculate the allocation rate for 20x2.
b)Calculate the total corporate over- or underapplied overhead (specify which)for 20x2.

PNG Corporation Designs and Builds Roller Coasters for Amusement Parks