Root company produces uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. reports the following cost data for the past year:

Direct labor hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,200 hours

6,600 hours

Machine hours. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,100 hours

6,900 hours

Depreciation on salespeople's autos. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,000

$24,000

Indirect materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$48,500

$52,000

Depreciation on trucks used to deliver uniforms to customers. . . . . .

$15,000

$13,000

Depreciation on plant and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$70,000

$72,000

Indirect manufacturing labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$39,500

$41,500

Customer service hotline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,500

$22,000

Plant utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$40,800

$42,800

Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$70,000

$85,000

Requirement 3. Compute the underallocated or overallocated manufacturing overhead. How will this underallocated or overallocated manufacturing overhead be disposed of?

First calculate the preliminary manufacturing overhead balance using the T-account.

Manufacturing Overhead
Actual indirect materials	52000			Manufacturing overhead allocated
Actual indirect manufacturing labor
Actual depreciation on plant and equipment	72000
Actual plant utilities	42800
End Bal