Gammaro Companyuses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour.

The following data are available for 2017:

1. Calculate the budgeted manufacturing overhead rate.
2. Calculate the manufacturing overhead allocated during 2017.
3. Calculate the amount of under- or overallocated manufacturing overhead. Why do Gammaro’s managers need to calculate this amount?

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Budgeted manufacturing overhead costs Budgeted machine-hours Actual manufacturing overhead costs Actual machine-hours $4,600,000 184,000 $4,830,000 180,000