Chapter 19, Problem 12QS

To determine

Introduction:

An Applied overhead cost is an estimated overhead cost based on the predetermined rate specified by a 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 close the balance in the Factory Overhead account to Cost of Goods Sold