ECONOMICS

Detailed explanation-1: -You can calculate applied manufacturing overhead by multiplying the overhead allocation rate by the number of hours worked or machinery used. So if your allocation rate is $25 and your employee works for three hours on the product, your applied manufacturing overhead for this product would be $75.

Detailed explanation-2: -To calculate the per unit overhead costs under ABC, the costs assigned to each product are divided by the number of units produced.

Detailed explanation-3: -In order to determine whether overhead was over or under applied for the period, the company’s cost account balances the manufacturing overhead account. If credits exceed debits, then overhead was over applied, if debits exceed credits than overhead was under applied.