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6 December, 08:00

The following information is available from the records of a manufacturing company that applies factory overhead based on direct labor hours: Estimated overhead cost: $500,000 Estimated labor hours: $200,000 Actual overhead cost: $515,000 Actual labor hours: $210,000 Based on this information, factory overhead is

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  1. 6 December, 08:05
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    The manufactured overhead was under-estimated.

    Explanation:

    Giving the following information:

    The actual manufacturing overhead costs incurred were $515,000.

    Estimated Manufacturing overhead was $500,000.

    Overhead allocation is the distribution of indirect costs to produced goods. When the administration has undervalued and under-funded the amount of money needed for non-production costs, they have under-allocated overhead.

    Over applied manufacturing overhead:

    Applied overhead>Actual overhead

    Under applied manufacturing overhead:

    Applied overhead
    In this exercise:

    Actual manufacturing overhead - Estimated Manufacturing overhead = 515000 - 500000 = 15000

    The manufactured overhead was under-estimated.
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