Question: Budgeted manufacturing overhead rate, allocated manufacturing overhead. Taylor Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2017:
Budgeted manufacturing overhead costs $3,800,000
Budgeted machine-hours 200,000
Actual manufacturing overhead costs $3,660,000
Actual machine-hours 196,000
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 Taylor's managers need to calculate this amount?