Question

i did the work but i dont know where i messed up can someone please help?

Check my work Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours. Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here: Estimated Value Actual value Manufacturing overhead cost $599,000 $ 659.000 Direct labor cost $ 400,000 $ 454,00 Direct labor hours 16,900 hours 18,400 hours Machine hours 7.900 hours 8,900 hours Required: 1. Based on the company's current allocation base (direct labor hours), compute the following: a. Predetermined overhead rate. (Round your answer to 2 decimal places.) b. Applied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) c. Over or underapplied manufacturing overhead (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 2. If the company had used direct labor dollars (instead of direct labor hours) as its allocation base, compute the following: a. Predetermined overhead rate. (Round your answer to 2 decimal places, l.e. 3.63%) b. Applied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) c. Over or underapplied manufacturing overhead. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) 3. If the company had used machine hours (instead of direct labor hours) as its allocation base, compute the following: b. Applied manufacturing overhead (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.) c. Over or underapplied manufacturing overhead (Round your intermediate calculations to 2 dịcimal places and final answer to the nearest whole dollar amount.) 4. Based on last year's data alone, which allocation base would have provided the most accurate measure for applying manufacturing overhead costs to production? < Prev 6 of 7 !!! Next > MacBook Air

Answer 1

1. Based on Direct labour hours

a. Predetermined Overhead rate = Estimated manufacturing overhead/ Estimated labour hours

= $598,000/16,900

=$35.38

b. Applied manufacturing overhead = Actual labour hours * Predetermined Overhead rate

= 18,400 * 35.38

= $650,992

c. Over(under) applied manufacturing overhead = Actual manufacturing overhead- Applied manufacturing overhead

= $659,000 - $650,992

= $8,008

2. Based on Direct labour dollars

a. Predetermined Overhead rate = Estimated manufacturing overhead/ Estimated direct labour cost

= $598,000/$400,000

= $1.50

b. Applied manufacturing overhead = Actual direct labour cost * Predetermined Overhead rate

= $454,000*1.5

= $681,000

c. Over(under) applied manufacturing overhead = Actual manufacturing overhead- Applied manufacturing overhead

=$659,000 - $681,000

Over applied manufacturing overhead = ($22,000)

3.Based on Machine hours:

a. Predetermined Overhead rate = Estimated manufacturing overhead/ Estimated machine hours

= $598,000/7,900

= $75.7

b. Applied manufacturing overhead = Actual machine hours * Predetermined Overhead rate

= 8,900*$75.7

= $673,730

c. Over(under) applied manufacturing overhead = Actual manufacturing overhead- Applied manufacturing overhead

=$659,000 - $673,730

Over applied manufacturing overhead = ($14,730)

4. Based on last year data, Direct Labour hours as a base is the most accurate measure for applying manufacturing overhead.