Overapplied Manufacturing Overhead Exists When Overhead Assigned to Work in Process

question 145

Multiple Choice

Overapplied manufacturing overhead exists when overhead assigned to work in process is

• A) more than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period.
• B) less than overhead incurred and there is a debit balance in Manufacturing Overhead at the end of a period.
• C) more than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period.
• D) less than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period.

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Definitions:

Overhead Applied

The allocation of estimated overhead costs to individual units of production, based on a predetermined rate.

Forming Department

A section in manufacturing where raw materials are shaped or formed into parts for further production processes.

Machine-Hours

The total hours that machinery is operated during the production process.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or jobs, based on a predetermined formula, prior to actual production.