Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Budgeted total overhead is $1,000,000
Budgeted machine-hours are 100,000.
Actual overhead was $1,006,000 and actual machine-hours were 102,000.
<u>First, we need to calculate the estimated overhead rate. Then, we can allocate overhead based on actual machine-hours. Finally, we determine the under/over-allocated.</u>
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 1,000,000/100,000= $10 per machine hour
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 10*102,000= $1,020,000
Finally, we determine under/over allocation:
Over/under allocation= real MOH - allocated MOH
Over/under allocation= 1,006,000 - 1,020,000= $14,000 overallocated
