Chapter 16, Problem 9DQ

(a)

(1)

To determine

Predetermined overhead

Factory overhead costs are applied or allocated to cost of job based on predetermined factory overhead rate. The formula to calculate the predetermined factory overhead rate is as follows:

$\text{Predetermined factory overhead rate = }\frac{\text{Estimated total factory overhead costs}}{\text{Estimated activity rate}}$

To state: the meaning of over applied factory overhead.

(b)

To determine

To explain: if factory overhead is underapplied or overapplied if factory overhead has debit balance.

(c)

To determine

To state: the reporting of credit balance of factory overhead in interim balance sheet.