Chapter 20, Problem 20.4AP

(a)

To determine

Predetermined Manufacturing Overhead:

Predetermined manufacturing overhead rate is the rate that has been worked out at the time of laying out the budget and the manufacturing overhead is applied using this rate. The predetermined rate and the activity uses is a source document used to assign the manufacturing overhead cost to each job.

• When the applied overhead cost is more than the actual overhead cost for a particular period, then the overhead is over applied.
• When the applied overhead cost is less than the actual overhead cost, then the overhead cost is under applied.

To determine: The predetermined overhead rate for each department.

(b)

To determine

The total manufacturing cost applied for each department in January.

(c)

To determine

Whether the overhead was under- or over applied and by how much.