PB2-7 (Static) Selecting an Allocation Base and Analyzing Manufacturing Overhead [LO 2-3, 2-5] Timberland 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 results for manufacturing overhead, direct labor cost, direct labor hours, and machine hours for the most recent fiscal year are summarized here: Manufacturing overhead cost Direct labor cost Direct labor hours Machine hours Note: Round your answer to 2 decimal places. b. Applied manufacturing overhead. c. Over- or underapplied manufacturing overhead. 1a. Predetermined Overhead Rate 1b. Applied Manufacturing Overhead Estimated Value $ 700,000 $ 437,500 Required: 1. Based on the company's current allocation base (direct labor hours), compute the following: a. Predetermined overhead rate. b. Applied manufacturing overhead. c. Over- or underapplied manufacturing overhead. 2. If the company had used direct labor dollars (instead of direct labor hours) as its allocation base, compute the following: 1c. Manufacturing Overhead 2a. Predetermined Overhead Rate 25,000 hours 12,500 hours a. Predetermined overhead rate. b. Applied manufacturing overhead. c. Over- or underapplied manufacturing overhead. 3. If the company had used machine hours (instead of direct labor hours) as its allocation base, compute the following: a. Predetermined overhead rate. 2b. Applied Manufacturing Overhead 2c. Manufacturing Overhead 3a. Predetermined Overhead Rate 3b. Applied Manufacturing Overhead Actual Value 4. Based on last year's data alone, which allocation base would have provided the most accurate measure for applying manufacturing overhead costs to production? 3c. Manufacturing Overhead 4. Most Accurate Measure $750,000 $ 464,000 27,000 hours 13,000 hours per DLH % of direct labor cost per machine hour