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The following information is available for the current year ending December 31:
Manufacturing overhead applied $150,000
The actual amount of manufacturing overhead costs 120,000 Knowledge Check 01
What is the balance of the Manufacturing Overhead account and is overhead underapplied or overapplied at the end of the year?

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Answer:

Over/under allocation= $30,000 overapplied

Explanation:

Giving the following information:

Manufacturing overhead applied $150,000

The actual amount of manufacturing overhead costs 120,000

To calculate the ending balance, we need to determine whether the overhead was under or over applied:

Over/under allocation= real MOH - allocated MOH

Over/under allocation= 120,000 - 150,000= 30,000 overapplied