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The McDonald Company allocates overhead costs by machine hours. At the beginning of the year the company expects total overhead costs to be $480,000. They
The McDonald Company allocates overhead costs by machine hours. At the beginning of the year the company expects total overhead costs to be $480,000. They expect total machine hours to be 6,000 and direct labor to be 80,000 hours. The actual overhead costs turn out to be $545,000. The actual machine hours during the year are 6,500 with actual direct labor of 90,000 hours.
a. How much overhead is allocated?
b. What is the over/underabsorbed overhead?
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