Managerial Accounting

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Using Materials Journal Entry, Figure Over- Or Under-Applied MOH


Fielding Inc. estimates their manufacturing overhead as a percent of direct materials used. In the current year, the predetermined overhead rate is 140% of direct material costs. The month end journal entry to record the production activity included the following:

Journal entry: DEBIT CREDIT
Work in Process \$55,000
Direct Materials \$55,000

Budgeted overhead was \$72,000 and actual overhead was \$77,500. What is the over-applied or under-applied overhead for the month?