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A actual overhead exceeds applied overhead
A actual overhead exceeds applied overhead. B applied overhead exceeds actual overhead. C applied overhead exceeds estimated overhead. D) actual overhead exceeds estimated overhead. Question 14 1 Point Which of the following is the correct formula to compute the predetermined overhead rate? A Estimated total manufacturing overhead costs divided by actual total units in the allocation base. (? Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. Actual total manufacturing overhead costs divided by estimated total units in the allocation base. D Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
Expert Solution
Question 1:
| Answer: A) Actual overhead exceeds applied overhead. |
Explanation:
Underapplied manufacturing overhead occurs when actual overhead exceeds applied overhead. Underapplied manufacturing overhead is added to cost of goods sold to arrive adjusted cost of goods sold. Applied overheads is calculated by predetermined overhead rate multiplied by actual base quantity consumed. When applied overhead exceeds actual overhead, it is called overapplied overheads. Options C and D are incorrect.
Question 2:
| Answer: D) Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. |
Explanation:
| Predetermined overhead rate = Estimated manufacturing overhead costs / Estimated Units |
Predetermined overhead rate is also called as budgeted overhead rate. It is used for computation of applied overheads. Applied overhead is compared with actual overheads to calculate under or over applied overheads. Therefore, option A, B and C are incorrect.
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