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	OVERHEAD COST ALLOCATION
	Marion & Gaborik are production managers at the Marion Gaborik Pty Ltd trailer factory in High River, Alberta, Canada.
	Both managers use predetermined overhead application rates to apply manufacturing overhead to their production.
	To calculate their application rates Marion uses machine hours while Gaborik uses direct labour hours.
	BUDGETED production and cost data for the two managers follows.
		Marion	Gaborik
	Manufacturing overhead	$241,500	$231,500
	Units	9,500	7,500
	Machine hours	10,000	5,000
	Material cost	$12,500	$15,500
	Direct labour hours	9,500	7,000
	Direct labour cost	$225,000	$228,000
	ACTUAL production and production information follows.
		Marion	Gaborik
	Manufacturing overhead	$225,000	$232,000
	Units	8,000	9,500
	Machine hours	8,000	9,500
	Material cost	$16,000	$17,000
	Direct labour hours	8,500	8,500
	Direct labour cost	$249,000	$220,000
	Compute Marion's predetermined overhead application rate.
	Compute Marion's overhead applied.
	Compute Marion's over (under) application of overhead.
	Compute Marion's cost per unit of production. Use actual labour & material and applied overhead.

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