Question 2:

Armidale Sisters is debating the use of direct labor (DL) cost or direct labor (DL) hours as the cost allocation base for allocating manufacturing overhead costs. The following information is available for the year ended December 31, 2020:

Estimated/budgeted direct labor cost	$437,500
Actual direct labor cost	$447,000
Estimated/budgeted manufacturing overhead costs	$350,000
Actual manufacturing overhead (MOH) costs	$338,000
Estimated/budgeted direct labor hours	25,000
Actual direct labor hours	24,200

Determine the following:

a) Predetermined MOH rate using direct labor cost as the allocation base

b) Predetermined MOH rate using direct labor hours as the allocation base

c) Allocated MOH based on direct labor cost

d) Allocated MOH based on direct labor hours

e) Using direct labor hours as the allocation base, was MOH under- or over-applied when DL hours are used as the MOH costs allocation base and by how much amount?

f) Using direct labor hours as the allocation base, prepare the journal entry to close out the over- or under-applied MOH worked out in e.