Use your answers from S3-7 to determine the total overallocation or underallocation of manufacturing overhead during the year. Actual manufacturing costs for the year for Edmonton Pools totaled \($1,425,000\).

1. Assume that the company used direct labor hours as the allocation base.

2. Assume that the company used the direct labor cost as the allocation base.

3. Assume that the company used machine hours as the allocation base.

4. Were there any situations in which jobs were costed correctly? If not, when were they overcosted? When were they undercosted?

Data From S3-7:-

Use your answers from S3-6 to determine the total manufacturing overhead allocated to Edmonton’s manufacturing jobs in the following independent situations:
1. Assume that the company actually used 51,700 direct labor hours.
2. Assume that the company actually incurred \($1,020,000\) of direct labor cost.
3. Assume that the company actually ran the machines 39,500 hours.
4. Briefly explain what you have learned about the total manufacturing overhead allocated to production.

Data From Question S3-6:-

Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be \($1,400,000\). Edmonton also estimates it will use 50,000 direct labor hours and incur \($1,000,000\) of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the predetermined manufacturing overhead rate for next year under the following independent situations:
1. Assume that the company uses direct labor hours as its manufacturing overhead allocation base.
2. Assume that the company uses direct labor cost as its manufacturing overhead allocation base.
3. Assume that the company uses machine hours as its manufacturing overhead allocation base.