Asked by Tasiah Anderson on May 13, 2024
Verified
Mike Hilyer is confused about under and overapplied manufacturing overhead. Define the terms for Mike and indicate the balance in the manufacturing overhead account applicable to each term.
Underapplied Manufacturing Overhead
The situation where the allocated manufacturing overhead costs are less than the actual costs incurred.
Overapplied Manufacturing Overhead
The condition where the allocated manufacturing overhead costs exceed the actual overhead expenses incurred during a period.
Manufacturing Overhead Account
An accounting term referring to all indirect costs associated with manufacturing a product, such as utilities, depreciation, and salary of indirect labor.
- Examine the effects of underapplied or overapplied overhead on financial statements.
Verified Answer
MA
Mariana AvalosMay 18, 2024
Final Answer :
Underapplied overhead means that the overhead assigned to work in process is less than the overhead incurred. Overapplied overhead means than the overhead assigned to work in process is greater than the overhead incurred. Manufacturing overhead will have a debit balance when overhead is underapplied and a credit balance when overhead is overapplied.
Learning Objectives
- Examine the effects of underapplied or overapplied overhead on financial statements.