Answer:
Answer is a) debit, actual
Manufacturing Overhead account has a debit balance and applied manufacturing overhead is greater than the actual manufacturing overhead
Explanation:
Overheads are applied to product costs using budgeted overhead rates. Budgeted rates are used because the delays in obtaining actual overhead affects timeous product valuation for profit purposes
Over applied situation occurs when the applied overheads exceeds the actual manufacturing overhead.
The Manufacturing Overhead Account will have the following entries:
Transfer to work in Progress figure - credit (with applied overheads)
Bank - debit (actual overhead)
Balancing figure or shortfall - debit (over-applied)
