Q.17-21E-b - Horngren'S Financial And Managerial Accounting

Question

 The manufacturing records for Sporty Kayaks at the end of the 2018 fiscal year show the following information about manufacturing overhead:

Overhead allocated to production	\(409,200
Actual manufacturing overhead cost	432,000
Predetermined overhead allocation rate	\)44 per machine hours

Requirements

2. Was manufacturing overhead overallocated or underallocated for the year, and by how much?

Step-by-Step Solution

Answer

The underallocated overhead for the year is $22,800

Machine hours

Machine hours is a measurement which is used to apply the manufacturing overhead to the manufactured goods of the company.

Underallocation of overhead

$$\begin{gathered} \mathbf{under}\mathbf{ }\mathbf{allocated}\mathbf{ }\mathbf{overhead}\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{actual}\mathbf{ }\mathbf{overhead}\mathbf{ }\mathbf{-}\mathbf{ }\mathbf{allocated}\mathbf{ }\mathbf{overhead} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{ }\mathbf{432}\mathbf{,}\mathbf{000}\mathbf{ }\mathbf{-}\mathbf{ }\mathbf{\$}\mathbf{409}\mathbf{,}\mathbf{200} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{22}\mathbf{,}\mathbf{800} \end{gathered}$$