Stallbaumer Incorporated makes a single product--an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:?Total budgeted manufacturing overhead$438,360??Budgeted hours39,000 labor-hours?Actual production (a)35,000 units?Standard hours per unit (b)1.30 labor-hours?Standard hours allowed for the actual production (a) × (b)45,500 labor-hours?Total actual manufacturing overhead$439,170??Actual hours47,500 labor-hoursRequired:Determine whether overhead was underapplied or overapplied for the year and by how much.
What will be an ideal response?
Predetermined overhead rate = $438,360/39,000 labor-hours = $11.24 per labor-hour
| ? | Predetermined overhead rate (a) | $11.24 | per labor-hour |
| ? | Standard hours allowed for the actual production (b) | 45,500 | labor-hours |
| ? | Manufacturing overhead applied (a) × (b) | $511,420 | ? |
| ? | Total actual manufacturing overhead | $439,170 | ? |
| ? | Manufacturing overhead underapplied or overapplied | $72,250 | Overapplied |
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