How is overhead allocated to jobs during the year calculated?

The allocation of overhead to jobs during the year is typically calculated using the overhead rate multiplied by the actual number of hours worked on each job. This method allows managers to assign a portion of indirect costs, which are not directly traceable to specific jobs, to the products being manufactured or the services being provided based on the actual usage of labor hours.

Using actual hours worked provides a more accurate reflection of the resources consumed in the production process, allowing for a fairer distribution of overhead costs across the jobs. This approach is also crucial for budgeting and variances analysis, as it aligns overhead allocation with real production activity. By determining the overhead allocation in this manner, businesses can more effectively analyze profitability and performance on a per-job basis, thus making informed managerial decisions.

The other options do not accurately reflect the common methodology for allocating overhead. For instance, estimating overhead based on estimated hours or costs can lead to inaccuracies since it does not account for actual production levels.