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فيديو شرح Overhead Allocation Predetermined Overhead Rate Cost Accounting CPA Exam BAR CMA Exam ضمن كورس محاسبة التكاليف شرح قناة Farhat Lectures. The # 1 CPA & Accounting Courses، الفديو رقم 14 مجانى معتمد اونلاين
What is a predetermined overhead rate and how is manufacturing overhead allocated? In this cost and managerial accounting lecture, Professor Farhat explains why actual overhead is impractical for pricing, how to compute a predetermined overhead rate, how normal costing applies overhead, and how to handle over-applied and under-applied overhead. CPA and CMA candidates and accounting students will find this essential BAR exam material.
Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students.
Video Timeline & Key Concepts:
0:00 — Introduction
0:09 — The overhead allocation challenge
6:15 — Computing the predetermined overhead rate
10:38 — Normal costing
11:01 — Over-applied and under-applied overhead
Frequently Asked Questions:
Why cant companies use actual overhead for pricing?
Manufacturing overhead such as indirect labor, utilities, and maintenance cannot be traced directly to products and can fluctuate seasonally, making actual overhead impractical for timely product pricing.
How is the predetermined overhead rate calculated?
The predetermined overhead rate equals estimated total manufacturing overhead divided by the estimated total allocation base, such as direct labor hours or machine hours.
What is normal costing?
Normal costing applies actual direct materials and direct labor but uses the predetermined overhead rate to apply overhead to products throughout the period.
How is over-applied or under-applied overhead handled?
If applied overhead is greater than actual overhead, it is over-applied and the credit balance reduces cost of goods sold. If actual overhead is greater than applied, it is under-applied and increases cost of goods sold.
Is this tested on the CPA exam?
Yes. Overhead allocation and predetermined overhead rates are tested in the BAR section and on the CMA exam.
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