If Actual Overhead for the Year Is $33,451 and Applied

question 156

Essay

If actual overhead for the year is $33,451 and applied overhead is $32,000,is the overhead variance overapplied or underapplied? Prepare the journal entry necessary to reconcile overhead.Assume the variance is immaterial.
Actual overhead is more than applied overhead so the overhead variance of $1,451 is underapplied.The journal entry would be:

---

Definitions:

Long-Lived Assets

Assets of a durable nature used in the regular operations of a business and that are expected to provide economic benefit for more than one year.

Standby Equipment

This term describes equipment that is kept on site and is ready to be used as a backup or support in case the primary equipment fails or needs maintenance.

Breakdown

A detailed analysis or classification of something into its constituent parts.

Long-Lived Assets

Assets with a useful life longer than one year, such as buildings, machinery, and equipment, used in the operation of a business.