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

Requirements

1. Compute the predetermined manufacturing overhead rate.

2. Calculate the allocated manufacturing overhead for the past year.

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

4. How can managers use accounting information to help control manufacturing overhead costs?

Budget Actual

Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 hours 6,100 hours

Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400 hours 6,400 hours

Depreciation on salespeople's autos . . . . . . . . . . . . . . . .$22,000 $22,000

Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,000 $50,500

Depreciation on trucks used to deliver uniforms to customers . . . . . . . . . . . . . . . . . . . . . . . $13,500 $11,500

Depreciation on plant and equipment . . . . . . . . . . . $70,000 $71,500

Indirect manufacturing labor . . . . . . . . . . . . . . . . . . . . $42,000 $45,000

Customer service hotline . . . . . . . . . . . . . . . . . . . . . . $19,500 $21,500

Plant utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,200 $21,200

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $85,000

Budget Actual Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 hours 6,100 hours

Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400 hours 6,400 hours

Depreciation on salespeople's autos . . . . . . . . . . . $22,000 $22,000

Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . $48,000 $50,500

Depreciation on trucks used to deliver uniforms to customers . . . . . . . . . . . . . . . . . . . . . . . $13,500 $11,500

Depreciation on plant and equipment . . . . . . . . . . . $70,000 $71,500

Indirect manufacturing labor . . . . . . . . . . . . . . . . . . . . $42,000 $45,000

Customer service hotline . . . . . . . . . . . . . . . . . . . . . . $19,500 $21,500

Plant utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,200 $21,200

Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $71,000 $85,000