Q9SE-c - Horngren'S Financial And Managerial Accounting

Question

Comparing actual to allocated overhead

Columbus Enterprises reports the following information at December 31, 2018:

                                             Manufacturing overhead

3,500	50,600
19,000
34,500

Requirements

3. Is manufacturing overhead underallocated or overallocated? By how much?

Step-by-Step Solution

Answer

The manufacturing overhead is underallocated by the amount $6,400

Under allocation of overhead

The allocation of overhead is under allocated when the actual overhead incurred by the company is more than the allocated manufacturing overhead. 

Underallocated overhead amount

The manufacturing overhead of the company is underallocated by the amount of $6,400