PA$2-7($Algo$)$ Selecting an Allocation Base and Analyzing Manufacturing Overhead $[$LO $2-3,2-5]$

Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should use a different allocation base such as direct labor dollars or machine hours.

Actual and estimated data for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here:

$\backslash$table$[[,$Estimated Value,Actual Value$],[$Manufacturing overhead cost,$$591,000,$$$652,000$