Chapter 19, Problem 11QS

To determine

Applied Overhead Cost:

The overhead cost estimated by the company during a particular period of time is called applied overhead cost. It is estimated based on the predetermined overhead rate specified by the company. If the actual overhead cost incurred on the production is more than the applied overhead cost estimated, the overhead cost is under-applied and if the actual overhead cost is less than the applied overhead cost, the overhead cost over-applied. An under-applied overhead cost increases the cost of goods sold and an over-applied overhead cost decreases the cost of goods sold.

Preparing journal entry to adjust the over- or under- applied overhead to Cost of Goods Sold.