1- Predetermined Overhead rate . Please writ the formula

Please explain to the best of your knowledge one or more of the following items:
1- Predetermined Overhead rate . Please writ the formula
2- Under -applied Overhead . please write the entry
3- Over-applied Overhead. please write the entry
4- What is the difference between Applied manufacturing overhead and Actual manufacturing overhead

Expert Solution

1. Predetermined overhead rate = This is the rate which used to apply the pre-estimated overhead (manufacturing) to production or any job order to reach out to final production cost. The formula can be defined as Pre-estimated manufacturing overhead cost to be divided with allocation factor base or overhead cost driver.

2. Under - applied overhead = When the actual overhead incurred exceeds the overhead applied to the Work in process towards the production, the un-applied portion of the actual overhead is called Under-applied overhead.

Journal Entry:

Debit WIP / COGS (under-applied amount $)

Credit Manufacturing overhead (under-applied amount $)

3. Over - applied overhead = When the overhead applied to the Work in process towards the production in a defined period exceeds the actual overhead incurred during the period, the over-applied portion to the actual overhead is called Over-applied overhead.

Journal Entry:

Debit Manufacturing overhead (over-applied amount $)

Credit WIP / COGS (over-applied amount $)

4) The difference between Applied manufacturing overhead and Actual manufacturing overhead is that the applied manufacturing overhead is calculated on the pre-determined rate basis to the production whereas the actual manufacturing overhead are the overhead expenses which are actually incurred (no estimate is there) within the defined period or year.

ekkarill92 answered 2 years ago

1- Predetermined Overhead rate . Please writ the formula 2- Under -applied Overhead . please write...

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