Question

Scotts Corporation allocates overhead using an approach based upon machine-hours. Budgeted factory overhead was $266,400, budgeted machine-hours included 18,500. Actual factory overhead was $287,920, and 19,050 actual machine-hours. How much manufacturing overhead should the manager allocate to the job?

Answer 1

Answer:

$287,920

Explanation:

Given:

Budgeted factory overhead = $266,400

Budgeted machine-hours included = 18,500

Actual factory overhead = $287,920

Actual machine-hours = 19,050

Now,

Budgeted Rate = $\frac{\ \textup{266,400}}{\ \textup{18,500}}$

or

Budgeted Rate = $14.40  

Overhead Allocated  =  Actual Hours × Budgeted Rate

or

Overhead Allocated = 19,050 × $14.40

or

Overhead allocated = $274,320

and,

Actual Overhead Costs = $287,920

since the the allocated amount is less than the actual amount, overhead is underallocated

Therefore, manufacturing overhead allocated should be $287,920