
Concept explainers
Treatment of Manufacturing
The Manufacturing overheads are indirect cost not directly identified and assigned to product or cost unit rather applied to these cost units on the basis of pre-determined basis. Therefore, there is almost every chance of difference between actual overheads incurred and overheads applied to production or cost unit.
For the treatment of Manufacturing overheads, a separate manufacturing overheads account is maintained which is debited for the amount actually incurred while processing and credited for the amount applied on cost unit. The difference between the two amounts may be under-over applied overheads.
When the debit side of manufacturing account is more than the credit, there will be under applied overheads (as actual amount incurred is more than overheads applied) and when there is credit balance in account, it is over-applied overheads (as overheads applied is more than actual overheads).
Requirement1:
The Actual manufacturing overheads incurred of Edith Corp.
Requirement 2:
The amount of overheads applied during the period.
Requirement3:
The Amount of under/ Over applied overheads amount.

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Chapter 19 Solutions
Horngren's Accounting, The Financial Chapters (11th Edition) - Standalone Book
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