Before the year began, Johnson Manufacturing estimated that manufacturing overhead for the year would be $160,000 and that 12,000 direct labour hours would be worked. Actual results for the year included the following:
Actual manufacturing overhead cost | $175,000 |
Actual direct labour hours | 15,000 |
If the company allocates manufacturing overhead based on direct labour hours, the manufacturing overhead for the year would have been
◦ $15,000 overallocated.
◦ $25,000 underallocated.
◦ $15,000 underallocated.
◦ $25,000 overallocated.