COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Refer to the amount of direct manufacturing cost actually occurred involved in certain period of time
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Refer to plan manufacturing overhead cost
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Refer to scheduled manufacturing cost, actual overhead cost is still unknown
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Estimated overhead based on actual activity level
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Detailed explanation-1: -Estimated overhead is budgeted at the beginning of the year and used to calculate the predetermined overhead rate. Applied overhead is the amount that is added to jobs as work is completed. This is done during the year as work is completed using the predetermined overhead rate and actual activity.
Detailed explanation-2: -In short, the main difference between the two concepts is that actual overhead is the amount of cost actually incurred, while applied overhead is the standard amount of overhead applied to cost objects. Given this difference, the two figures are rarely the same in any given year.
Detailed explanation-3: -Applied overhead is a type of direct overhead expense that is recorded under the cost-accounting method. Applied overhead is a fixed rate charged to a specific production job, good produced, or department within a company. Companies use cost accounting to identify the expenses associated with manufacturing.
Detailed explanation-4: -Applied overhead is the estimation that accountants make to prepare companies for impending costs. Actual overhead is the total of bills and statements at the end of the period.
Detailed explanation-5: -Actual manufacturing overhead costs are the indirect manufacturing costs incurred periodically throughout the year in the production process. Manufacturing overhead applied are the overhead costs added or applied to each job during the production process.