(Overallocated/Underallocated Overhead) Bob’s Bicycles manufactures high-quality trail bikes. The company has two divisions: Painting and Assembly. Painting is fully automated, as each bike part is run through a paint-spraying machine. Assembly, on the other hand, is highly labour-intensive, as most of the bike parts are assembled by hand. The company allocates overhead costs for the Painting Department based on machine hours and allocates overhead for the Assembly Department based on labour hours. The following are the budgeted overheads and estimated cost drivers for 2012 by department:
|
Painting |
Assembly |
|
|
Overhead costs |
$400,000 |
$175,000 |
|
Estimated DLH |
2,500 |
30,000 |
|
Estimated machine hours |
45,000 |
3,125 |
During 2012, Job 445 required the following labour and machine hours:
|
Painting |
Assembly |
|
|
Actual DLH |
20 |
300 |
|
Actual machine hours |
475 |
18 |
- How much overhead would be assigned to this job?
- How much was overhead under- or overallocated if the actual overhead costs incurred during 2012 were $625,000, and the actual machine hours for painting were 47,500, and the actual labour hours for assembly were 33,000?