Q. 10SE-a - Horngren'S Financial And Managerial Accounting

Question

The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018 is as follows

                                                Manufacturing overhead

195,000

203,000

Requirements

1. What is the actual manufacturing overhead?

Step-by-Step Solution

Answer

The actual manufacturing overhead is $195,000

Step 1: Indirect expenses

The indirect expenses of the company means the expenses which are not directly related with the manufacturing of goods. The aggregate of all the indirect expenses are termed as the manufacturing overheads.

Step 2: Actual manufacturing overheads

$$\begin{gathered} \mathbf{Actualmanufacturingoverhead}\mathbf{=}\mathbf{Debitbalanceofmanufacturingoverheadaccount} \\ \mathbf{=}\mathbf{\$}\mathbf{195}\mathbf{,}\mathbf{000} \end{gathered}$$