27. Before the year began, Johnson Manufacturing estimated that manufacturing ov

Question

27. Before the year began, Johnson Manufacturing estimated that manufacturing overhead for the year would be S160,000 and that 12,000 direct labor hours would be worked. Actual results for the year included the following: Actual manufacturing overhead cost Actual direct labor hours $175,000 15,000 If the company allocates manufacturing overhead based on direct labor hours, the manufacturing overhead for the year would have been: A. S15,000 overallocated B. $15,000 underallocated. C. $25,000 overallocated D. $25,000 underallocated.

Explanation / Answer

predtermined overhead rate= total estimated overhead costs/total direct labour hours
=160000/12000
=13.33
Applied overhead=15000*13.33=200,000
Actual overhead is 175000 so it is 25,000 overapplied

It is option C

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