Question at position 8 Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2020:For June 2020, manufacturing overhead is: overallocated by $29,500underallocated by $9,500underallocated by $29,500overallocated by $9,500题目解析

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Question at position 8 Franklin Inc. manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2020:For June 2020, manufacturing overhead is: overallocated by $29,500underallocated by $9,500underallocated by $29,500overallocated by $9,500题目解析

BlackTom AI · Accepted Answer

To analyze overhead, first identify the components that comprise manufacturing overhead and the method used to apply it.

Step 1: Determine the overhead rate and applied overhead.
- Budgeted indirect-cost rate: $15 per direct labor-hour.
- Direct labor-hours incurred: 4,700 hours.
- Overhead applied to production = 4,700 hours × $15/hour = $70,500.

Step 2: Identify actual manufacturing overhead costs.
- Indirect labor: $10,000
- Plant facility rent: $26,000
- Depreciation on plant machinery and equipment: $25,000
- (Note: Sales commissions and administrative expenses are not manufacturing overhead; they are period costs and are not included in the overhead pool.)
- Total actual manufacturing overhead = $10,000 + $26,000 + $25,000 = $61,000.

Step 3: Compare applied vs. actual overhead to determine under- or overallocation.
- Overhead variance = Applied overhead − Actual manufacturing overhead = $70,500 − $61,000 = $9,500.
- A positive variance indicates overallocation (more overhead was applied than was actually incurred).

Step 4: Match the result with the provided options.
- The calculation shows an overallocation of $9,500.
- The other options would imply different totals or directions (e.g., $29,500 over/under allocations), which do not align with the computed $9,500 overallocation.

Summary note: Since only the manufacturing overhead pool is considered for allocation and the period costs (sales commissions, administrative expenses) are excluded from manufacturing overhead, the June 2020 overhead is overallocated by $9,500.

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