Total manufacturing overhead allocated under normal costing PDF

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Total manufacturing overhead allocated under normal costing = Actual manufacturing labor costs × Budgeted overhead rate = $2,250,000 × 1.80 = $4,050,000 Overallocated manufacturing overhead = Manufacturing overhead allocated – Actual manufacturing overhead costs = $4,050,000  $3,780,000 = $270,000 There is no under- or over-allocated overhead under actual costing because overhead is allocated under actual costing by multiplying actual manufacturing labor costs and the actual manufacturing overhead rate. This, of course, equals the actual manufacturing overhead costs. All actual overhead costs are allocated to products. Hence, there is no under- or over-allocated overhead. 4. Managers at Carolin Chemicals might prefer to use normal costing because it enables them to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers may want to know job costs for ongoing uses, including pricing jobs, monitoring and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements. Under actual costing, managers would only determine the cost of a job at the end of the year when they know actual manufacturing overhead costs....