Question $10$

If a company incurred $$5,250$ in actual overhead costs and allocated

$$5,575$ to jobs, was the overhead overallocated or underallocated? By

how much?

Underapplied overhead occurs when the actual overhead cost exceeds the

amount of overhead cost applied to Work in Process inventory during the

period.

The overhead is overallocated because the company allocated more than the

actual overhead costs. The amount is $$325($$$5,575-$$$5,250).$

This transaction increases assets $($Raw Materials Inventory$)$ and increases

liabilities $($Accounts Payable$).$