FreeBake produces pie crusts and tart shells. The company allocates manufacturing overhead based on the machine hours each job uses. FreeBake reports the following cost data for the past year.
| | BUDGET | ACTUAL |
| Direct labour hours | 14,000 hours | 12,800 hours |
| Machine hours | 13,500 hours | 12,600 hours |
| Depreciation on salespeople's autos | $26,000 | $26,000 |
| Direct materials | 98,000 | 104,000 |
| Depreciation on delivery trucks | 26,000 | 28,000 |
| Depreciation on plant and equipment | 127,000 | 134,000 |
| Indirect manufacturing labour | 80,000 | 86,000 |
| Customer service hotline | 38,000 | 42,000 |
| Plant utilities | 36,000 | 40,000 |
| Direct labour cost | 140,000 | 170,000 |
Required:
1. Compute the predetermined overhead rate.
2. Calculate the allocated Manufacturing Overhead for the past year.
3. Compute the under allocated or over allocated Manufacturing Overhead.
4. How will this under allocated or over allocated Manufacturing Overhead be disposed of?
Assume the amount is considered not material and most of the goods manufactured have been sold
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