Question

1.If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be underapplied.

True

False

.

2.Which of the following is the correct formula to compute the predetermined overhead rate?

Actual total manufacturing overhead costs divided by estimated total units in the allocation base.

Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

Estimated total units in the allocation base divided by estimated total manufacturing overhead costs.

Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.

Answer 1

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be underappied.

True    .This is true because the overhead applied or recovered is less than the actual overhead and thus it is under-applied. This happens due to wrong estimate made in estimating the overhead.

2. The correct formula to compute the predetermined overhead rate:

    Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.

This is correct as the total overhead divided by total units of allocation gives the predetermined allocation rate.