For 2018, Franklin Manufacturing uses machineminushours as the only overhead costminusallocation base. The estimated manufacturing overhead costs are $ 340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $ 450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.)

Question

Crystal

Business

23 October, 17:29

For 2018, Franklin Manufacturing uses machineminushours as the only overhead costminusallocation base. The estimated manufacturing overhead costs are $ 340,000 and estimated machine hours are 40,000. The actual manufacturing overhead costs are $ 450,000 and actual machine hours are 50,000. What is the difference between the budgeted and the actual manufacturing overhead using job costing? (Round interim and the final answer to the nearest cent.)

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Hassan Shaw · Answer 1

Over/under allocation = $25,000 underallocated

Explanation:

Giving the following information:

Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base.

The estimated manufacturing overhead costs are $ 340,000 and the estimated machine hours are 40,000. The actual manufacturing overhead costs are $ 450,000 and actual machine hours are 50,000.

First, we need to determine the MOH rate:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base = 340000/40000 = $8.5 per machine hour

Now, we can calculate the allocated MOH:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base = 8.5 * 50000 = $425,000

Over/under allocation = real MOH - allocated MOH = 450,000 - 425,000 = 25000 underallocated