COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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amount of direct manufacturing cost actually involved in a certain period of time
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plan manufacturing overhead cost
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budgeted manufacturing cost, because the actual overhead cost is still unknown
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estimated overhead based on actual activity level
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Detailed explanation-1: -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-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: -Overhead variance refers to the difference between actual overhead and applied overhead. You can only compute overhead variance after you know the actual overhead costs for the period. Overhead is applied based on a predetermined rate and a cost driver.
Detailed explanation-4: -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.