Luthan Company uses a plantwide predetermined overhead rate of $22.70 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $272,400 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours.
The company incurred actual total manufacturing overhead costs of $ and total direct labor-hours during the period.

Instructions are listed below.

Explanation:

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Giving the following information:

Luthan Company uses a plantwide predetermined overhead rate of $22.70 per direct labor-hour.

The company incurred actual total manufacturing overhead costs of $269,000 and 10,800 total direct labor-hours during the period.

We need to allocate overhead using the predetermined overhead rate and the actual direct labor hours incurred.

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 22.7*10,800= $245,160

Bonus:

Determine the under/over allocation:

Over/under allocation= real MOH - allocated MOH

Over/under allocation= 269,000 - 245,160= $23,840 underallocated

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