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Altima Company Uses an Overhead Costing System Based on Direct

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Essay

Altima Company uses an overhead costing system based on direct labor hours for its two products X and Y.The company is considering adopting an activity-based costing system,and collects the following information for the month of October.


Definitions:

Overapplied Overhead

A situation where the overhead allocated to products exceeds the actual overhead costs incurred, leading to a need for adjustment in cost accounting.

Overapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead costs are more than the actual overhead costs incurred during a period.

Work in Process Inventory

Goods that are in the process of being manufactured but are not yet complete.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including but not limited to utilities, supervision, and factory equipment maintenance.

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