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Chapter 2

ADMS 2510 Chapter Notes - Chapter 2: Finished Good, Matching Principle

Administrative Studies
Course Code
ADMS 2510
Alison Beavis

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The predetermined overhead rate is determined before the period begins by dividing the estimated total
manufacturing overhead cost for the period by the estimated total allocation base for the period. The
most frequently used allocation bases are direct labour-hours and machine-hours.
The under- or over applied overhead for a period can be (1) closed out to Cost of Goods Sold or (2)
allocated among Work in Process, Finished Goods, and Cost of Goods Sold, or (3) carried forward to the
end of the year.
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