Question

Nuan Corp produces outdoor camping supplies. It has the following data for manufacturing overhead costs during May 2020:

	Variable	Fixed
Actual costs incurred	$42,000	$23,500
Costs allocated to products	38,000	21,200
Flexible budget	––––––	24,000
Actual input × budgeted rate	39,500	––––––

How much is total over/under allocated?

		4300 Under
		6300 Under
		4300 Over
		6300 Over

Answer 1

Answer:

Actual Overhead costs          = Variable + Fixed          = $ 42,000 + $ 23,500          = $ 65,500

Applied Overhead Costs/ Costs Allocated          = Variable + Fixed          = $ 38,000 + $ 21,200          = $ 59,200

Actual Overhead costs (-) Applied Overhead Costs/ Costs Allocated         = $ 65,500 (-) $ 59,200         =   $ 6,300 (Under Applied)

Option (b) is Correct 6,300 Under