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30 June, 12:00

If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is: Select one:

a. underapplied.

b. overapplied.

c. a loss on the income statement under "Other Expenses and Losses."

d. considered a miscellaneous expense.

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Answers (1)
  1. 30 June, 12:52
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    a. under applied.

    Explanation:

    For computing, whether it is under applied or over applied first, we have to compute the predetermined overhead rate. The formula is shown below:

    Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours)

    Now we have to find the applied overhead which equal to

    = Actual direct labor-hours * predetermined overhead rate

    So, the ending overhead equals to

    = Actual manufacturing overhead - applied overhead

    = under-applied

    If actual overhead is more than the applied overhead
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