Which accounts should be debited and credited to dispose over-applied overhead balance? The costs of manufacturing a product that cannot be traced to a particular Job are called overhead Overhead costs must be allocated to the products made to determine what each product costs Assume that Alarie Manufacturing itimates it will spend $100.000 on Werbead expemes. Alarie Manufacturing is a highly automated manufacturing and therefore, the majority of its overhead experies relate to machinery depreciation repair and maintenance, cectricity used Machine house would be reasonable way to locate overhead costs to products because use of machinery Causes for drives overhead expenses Alaric Manufacturing estimates that it will on its machines for 10.000 hours during the year The formula to calculate predetermined factory overhead rate is follows POHR-mateo Totalco Overhead costs litimated Actie Machine tour -5100.000 - 10.000 $10 per hour In this case 10 in overed it stocated each time product accounts one hour of machine te Disposal of Overapplied ar Underapplied Overhead Required Calculate the amount of wat allocated to the products of a company that has a pretermined to rate of peace bour machines et des 7 Answer: 57000 Written by Sport 30.000 on the comiy hat unders of 510.000 500.000 - 10.000 Underapplied actory overheden debit balance in the heart ont applied factory overhead credit balance in to owhead coace in medcount should not be the balance dedef by tantung Disposal of Overapplied or Underapplied Overhead Required Calculate the amount or overhead allocated to the products of a company that has a predetermined overhead tate of 10 per machine hour if machines were used for 7,000 hours (Answer: 570.000 What if the company actually spent $80.000 on overhead costs the company han underapplied overhead of $10,000 $80,000 - 70,000 Underapplied factory overhead results in a debit balance in the factory overhead account, whereas overapplied factory overhead results in a credit balance in the factory overhead account. Because any balance in the factory overhead account should not be carried over to the next year the ending balance s ditponed of ty transferring it to the cost of goods sold account If there is an ending debit balance (under-applied overhead) in the factory overhead account, it is disposed of by the debiting Cost of Goods Sold and Crediting Factory Overhead. The question here is if there is an ending credit balance (over-applied overhead) in the factory overhead account, which accounts should be debited and credited to dispose the over-applied overhead balance