Question

Lakeside, Inc. estimated manufacturing overhead costs for the year at $370,000​, based on 182,000 estimated direct...

Lakeside, Inc. estimated manufacturing overhead costs for the year at

$370,000​, based on 182,000 estimated direct labor hours. Actual direct labor hours for the year totaled 194,000.

The manufacturing overhead account contains debit entries totaling $391,000.

The Manufacturing Overhead for the year was​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

A.

$43,887 underallocated

B.

$2,820 underallocated

C.

$2,820 overallocated

D.

$43,887 overallocated

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Answer #1

Estimated manufacturing overhead = $370,000

Estimated direct labor hours = 182,000

Predetermined overhead rate = Estimated manufacturing overhead/ Estimated direct labor hours

= 370,000/182,000

= $2.03 per direct labor hour

Actual direct labor hours = 194,000

Applied manufacturing overhead = Actual direct labor hours x Predetermined overhead rate

= 194,000 x 2.03

= $393,820

Actual manufacturing overhead = $391,000

Over applied manufacturing overhead = Applied manufacturing overhead - Actual manufacturing overhead

= 393,820-391,000

= 2,820

The Manufacturing Overhead for the year was $2,820 overallocated

Correct option is C.

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