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Questions and Answers
A company's predetermined overhead recovery rate is R12 per direct labor hour. If the actual manufacturing overhead was R1,400,000 and the applied overhead was R1,440,000, what is the amount of over or under application of overhead?
A company's predetermined overhead recovery rate is R12 per direct labor hour. If the actual manufacturing overhead was R1,400,000 and the applied overhead was R1,440,000, what is the amount of over or under application of overhead?
- R80,000 under-applied
- R40,000 under-applied
- R80,000 over-applied
- R40,000 over-applied (correct)
If actual manufacturing overheads are R1,550,000 and recovered manufacturing overheads are R1,500,000, which of the following journal entries correctly reflects the adjustment for the under-applied overhead?
If actual manufacturing overheads are R1,550,000 and recovered manufacturing overheads are R1,500,000, which of the following journal entries correctly reflects the adjustment for the under-applied overhead?
- Debit Cost of Goods Sold R50,000, Credit Manufacturing Overhead R50,000 (correct)
- Debit Manufacturing Overhead R50,000, Credit Work in Process R50,000
- Debit Manufacturing Overhead R50,000, Credit Cost of Goods Sold R50,000
- Debit Work in Process R50,000, Credit Manufacturing Overhead R50,000
A company allocates overhead based on machine hours. The predetermined overhead rate is $25 per machine hour. During the period, actual overhead was $650,000 and 25,000 machine hours were worked. What was the amount of under- or over-applied overhead?
A company allocates overhead based on machine hours. The predetermined overhead rate is $25 per machine hour. During the period, actual overhead was $650,000 and 25,000 machine hours were worked. What was the amount of under- or over-applied overhead?
- $250,000 under-applied (correct)
- $25,000 over-applied
- $250,000 over-applied
- $25,000 under-applied
If a company has over-applied overhead, which of the following is generally true?
If a company has over-applied overhead, which of the following is generally true?
A company uses a predetermined overhead rate based on direct labor cost. At the beginning of the year, it estimated total overhead costs of $500,000 and total direct labor costs of $400,000. During the year, actual overhead costs were $480,000 and actual direct labor costs were $410,000. By how much was overhead underapplied or overapplied?
A company uses a predetermined overhead rate based on direct labor cost. At the beginning of the year, it estimated total overhead costs of $500,000 and total direct labor costs of $400,000. During the year, actual overhead costs were $480,000 and actual direct labor costs were $410,000. By how much was overhead underapplied or overapplied?
A company calculated a predetermined overhead rate of $20 per machine hour. Actual overhead was $900,000, and total machine hours were 40,000. What was the amount of under- or over-applied overhead?
A company calculated a predetermined overhead rate of $20 per machine hour. Actual overhead was $900,000, and total machine hours were 40,000. What was the amount of under- or over-applied overhead?
Which of the following is the most accurate description of 'predetermined overhead rate'?
Which of the following is the most accurate description of 'predetermined overhead rate'?
A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that it would incur $800,000 in manufacturing overhead costs and work 50,000 direct labor hours. Actual overhead costs were $750,000, and the company worked 48,000 direct labor hours. What is the predetermined overhead rate?
A manufacturing company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that it would incur $800,000 in manufacturing overhead costs and work 50,000 direct labor hours. Actual overhead costs were $750,000, and the company worked 48,000 direct labor hours. What is the predetermined overhead rate?
Overhead is applied to production using a predetermined rate of $15 per direct labor hour. If 2,000 direct labor hours were worked during the month, and actual overhead was $33,000, what was the amount of under- or over-applied overhead?
Overhead is applied to production using a predetermined rate of $15 per direct labor hour. If 2,000 direct labor hours were worked during the month, and actual overhead was $33,000, what was the amount of under- or over-applied overhead?
Which of the following describes what happens when manufacturing overhead is overapplied?
Which of the following describes what happens when manufacturing overhead is overapplied?
Flashcards
Predetermined overhead recovery rate
Predetermined overhead recovery rate
The rate used to apply manufacturing overheads to products. Calculated as estimated overhead costs divided by estimated activity base.
Recovered Manufacturing Overheads
Recovered Manufacturing Overheads
The amount of overhead applied to products based on the predetermined overhead rate and actual activity level.
Over Application of Overheads
Over Application of Overheads
When applied manufacturing overheads exceed actual manufacturing overheads.
T-account (Manufacturing Overheads)
T-account (Manufacturing Overheads)
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Study Notes
- The predetermined overhead recovery rate is R 12 (R 1 200 000 / 100 000 hours).
- Recovered manufacturing overheads amount to R 1 320 000 (110 000 hours x R 12).
- Actual manufacturing overheads were R 1 300 000.
- The over application is R 20 000 (R 1 320 000 – R 1 300 000).
Manufacturing Overheads T-account
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Bank/Accounts payable (actual): R 1 300 000
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WIP (applied): R 1 320 000
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Cost of sales: R 20 000
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Total: R 1 320 000 each side
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Debit Manufacturing overheads R 20 000.
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Credit Cost of sales (over recovery) R 20 000.
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