Professional Documents
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Chap03 PPT
Chap03 PPT
Chap03 PPT
Introduction to
Managerial Accounting
Ninth edition
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Copyright McGraw
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Flow of Costs: a Conceptual
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Overview
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Mfg. Overhead
Actual Applied
Indirect
Materials
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Mfg. Overhead
Actual Applied
Indirect
Materials
Indirect
Labor
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Mfg. Overhead
Actual Applied
Indirect
Materials
Indirect
Labor
Other
Overhead
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Actual Applied
Indirect Overhead
Materials If actual and applied
Applied to
Indirect manufacturing overhead
Work in
Labor are not equal, a year-end
Process
adjustment is required.
Other
Overhead
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Cost of
Goods
Sold
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Key Concepts
The difference between the overhead cost applied
to Work in Process and the actual overhead costs
of a period is referred to as either underapplied or
overapplied overhead.
Underapplied overhead Overapplied overhead
exists when the amount of exists when the amount of
overhead applied to jobs overhead applied to jobs
during the period using the during the period using the
predetermined overhead predetermined overhead
rate is less than the total rate is greater than the
amount of overhead total amount of overhead
actually incurred during actually incurred during
the period. the period.
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$30,000 $30,000
Adjusted overapplied
Balance
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