Answer:
Under/over applied overhead= $21,000 overapplied
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 280,000/2,000
Predetermined manufacturing overhead rate= $140 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 140*2,400
Allocated MOH= $336,000
Finally, the under/over allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 305,000 - 336,000
Under/over applied overhead= $21,000 overapplied
