Manufacturing Overhead Cost of Goods Sold Actual _Applied Balance Adjust Adjust _applied M2-8 Calculating Over- or Underapplied Manufacturing Overhead Refer to M2-6 for Carey Company. 1. Compute over- or underapplied overhead. 2. Explain how you would handle the over- or underapplied overhead at the end of the accounting period. Which accounts will be affected? Will the accounts be increased or decreased? M2-8 Req. 1 Predetermined Overhead Rate = Applied Manufacturing Overhead = Manufacturing Overhead Actual Applied Balance Under or over applied??? Req. 2 At the end of the accounting period, an adjusting entry is made to M2-6 Calculating Predetermined Overhead Rates Carey Company applies manufacturing overhead costs to products as a percentage of direct labor dollars. Estimated and actual values of manufacturing overhead and direct labor costs are summa- rized here: Estimated Actual Direct labor cost Manufacturing overhead $600,000 900 000 $550,000 850,000 M2-6