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فيديو شرح Predetermined overhead rate Overapplied & underapplied overhead Cost Accounting CPA Exam BAR ضمن كورس محاسبة التكاليف شرح قناة Farhat Lectures. The # 1 CPA & Accounting Courses، الفديو رقم 40 مجانى معتمد اونلاين
How do you calculate a predetermined overhead rate and handle overapplied and underapplied overhead? In this BAR and cost accounting exercise, Professor Farhat shows how to compute the overhead rate from budgeted amounts, apply overhead to jobs, compare actual to applied overhead, and reconcile the variance by closing it to cost of goods sold or allocating it across accounts. Ideal for CPA BAR and CMA candidates and cost accounting students.
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 — Determining the predetermined overhead rate
3:21 — Assigning overhead to jobs
3:52 — Overapplied vs underapplied overhead
5:34 — Reconciling the overhead variance
6:01 — Simple method: close to cost of goods sold
7:19 — Allocated method: prorate across WIP, finished goods, and COGS
Frequently Asked Questions:
What is a predetermined overhead rate?
A predetermined overhead rate is an allocation rate computed at the start of a period by dividing budgeted overhead by a budgeted allocation base, such as direct labor cost. It is used to apply overhead to jobs before actual costs are known.
What is the difference between applied and actual overhead?
Applied overhead is the amount assigned to jobs using the predetermined rate, while actual overhead is what the company actually incurred. The difference between the two produces overapplied or underapplied overhead.
What is underapplied and overapplied overhead?
Overhead is underapplied when actual overhead is greater than the amount applied, and overapplied when the amount applied is greater than the actual overhead. The difference is a variance that must be cleared at period end.
How do you dispose of an overhead variance?
A small variance is often closed entirely to cost of goods sold, while a larger variance may be prorated across work in process, finished goods, and cost of goods sold based on their relative balances. Both approaches remove the balance from the overhead account.
Why is the overhead account closed at year end?
The overhead applied account is a temporary clearing account, so any remaining balance must be removed so that reported inventory and cost of goods sold reflect appropriate costs. Closing the variance ensures the financial statements are accurate.
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