Chapter 3

Overapplied Overhead

A credit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost applied to Work in Process exceeds the amount of overhead cost actually incurred during a period.

Underapplied Overhead

A debit balance in the Manufacturing Overhead account that occurs when the amount of overhead cost actually incurred exceeds the amount of overhead cost applied to Work in Process during a period.

Schedule of Goods Sold

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.

Schedule of Goods Manufactured

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.

Raw Materials

any materials that go into the final product

Finished Goods

consist of completed units of product that have not yet been sold to customers

Raw Materials

Beginning Raw Materials Inventory + Purchase of Raw Materials - Ending Raw Materials Inventory

Cost of Goods Manufactured

The manufacturing costs associated with units of product that were finished during the period;

Work In Process (WIP)

Units of product that are only partially complete and will require further work before they are ready for sale to the customer.