Smith Paints allocates overhead based on machine hours. Selected data for the most recent year follow.
Estimated manufacturing overhead cost | $250,000 |
Actual manufacturing overhead cost | $230,000 |
Estimated machine hours | 20,000 |
Actual machine hours | 21,000 |
The estimates were made as of the beginning of the year, while the actual results were for the entire year.
The manufacturing overhead for the year would have been
◦ $20,000 underallocated.
◦ $32,500 overallocated.
◦ $20,000 overallocated.
◦ $32,500 underallocated.