Hogle Mfg. Co. uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 3,000 units monthly. Overhead costs were estimated to be $135,000. The standard variable overhead rate is $5 per machine hour. During April the following results were recorded: Units produced 3,100
Units sold 2,800
Machine hours required 12,800
Actual overhead costs $136,000
The total overhead allocated was:
A)$135,000
B)$139,500
C)$141,500
D)$137,000

Question

Quizplus · Accepted Answer

To calculate the total overhead allocated, we need to first calculate the standard overhead rate per machine hour. 
Standard overhead rate = Estimated overhead costs / Estimated machine hours
= $135,000 / (3,000 units x 4 hours per unit)
= $11.25 per machine hour

Next, we can calculate the total overhead allocated using the actual machine hours used:
Total overhead allocated = Actual machine hours used x Standard overhead rate
= 12,800 machine hours x $11.25 per machine hour
= $144,000

However, since the question asks for the total overhead allocated, we need to adjust for the overapplied or underapplied overhead. 
Overapplied overhead = Actual overhead costs - Total overhead allocated 
= $136,000 - $144,000
= -$8,000 (overapplied)

This means that the actual overhead costs were less than the overhead allocated based on the standard rate. To adjust for this, we subtract the overapplied overhead from the total overhead allocated:
Total overhead allocated - Overapplied overhead = $144,000 - (-$8,000) = $152,000

Therefore, the correct answer is B.

Hogle Mfg Co