Since invoices often arrived late, it was difficult to approximate the
applied overhead total and compare it to the fixed overhead components for spending that had been booked either through standard entries for depreciation or estimated monthly utility costs.
Fourth, the final step of juxtaposing actual overhead and
applied overhead at the end of the period to determine the difference and then closing overapplied or underapplied overhead can be a challenge.
This can be
applied overhead and is more easily confined to specific areas requiring cleaning than the liquid version.
Total manufacturing cost is the sum of the cost of materials, labor, and
applied overhead. If manufacturing overhead were a negligible portion of total product cost, misapplication of manufacturing overhead would not be a concern.
Companies are not bound by GAAP when allocating overhead costs on a quarterly basis using
applied overhead rates.