IX. Overhead costs are allocated in four steps.

A. Step 1: _____________ the overhead rate.

1. A ________________ overhead rate is calculated as estimated overhead costs divided by estimated cost driver activity.

B. Step 2: ______________ the overhead rate.

1. Costs are assigned by multiplying the actual cost _____________ activity by the predetermined overhead rate.

C. Step 3: Record ________________ overhead costs

D. Step 4: _________________ applied and actual overhead amounts

1. If over- or underapplied amounts are minimal, credit or debit _________________.

2. If over- or underapplied amounts are material, adjustments should be made to the inventory accounts affected.

X. The __________________ approach to applying overhead costs is to use a single plantwide rate.

XI. The more accurate _____________________ approach to applying overhead costs creates many smaller activity pools and establishes separate rates for each pool.