Answer
-$30,000 (Overallocated)
Work Step by Step
Calculate the amount of under- or overallocated manufacturing overhead:
Actual Manufacturing Overhead Costs - Manufacturing Overhead Allocated
4,050,000 - 4,080,000 = -30,000 (Overallocated)
Gammaro's managers need to calculate the amount of under- or overallocated manufacturing overhead to understand the variance between the budgeted and actual manufacturing overhead costs. An overallocation of 30,000 means that more overhead was allocated than was actually incurred. This information is important for cost control, financial reporting, and decision-making, as it helps managers assess the accuracy of their cost estimates and may influence pricing, cost management, and future budgeting decisions.
