The manufacturing overhead was overapplied by $32,000. Hence the correct choice of answer for this question would be option (b).
<h3>Give a brief account on
manufacturing overhead.</h3>
Manufacturing overhead includes all incidental costs encountered during the production process. This overhead applies to units produced within a reporting period.
Some examples of costs that fall within the manufacturing overhead category are as follows:
- Depreciation may be applied to production-related equipment.
- property assessments for the manufacturing facility
- Rent on the manufacturing facility
- wages for maintenance workers
- Manufacturing managers' salaries
- salaries of the personnel in charge of materials
- salaries of the quality assurance personnel
- supplies not specifically related to the products
- Building janitorial staff's salaries
As direct materials and direct labor are generally considered to be the only costs that are directly applied to a unit of production, manufacturing overhead is becomes all of the indirect costs that a factory incurs.
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The complete question is mentioned below :
The Manufacturing Overhead account shows debits of $240,000, $192,000, and $224,000 and one credit for $688,000. Based on this information, was manufacturing overhead over- or underapplied and by how much?
a. $32,000 overapplied
b. $32,000 underapplied
c. Overhead has not yet been applied
d. Overhead is neither over- or underapplied
