Costs v.s expenses
Costs is incurred in the manufacturing process, you fixed them in the manufacturing statement. Expenses is an outflow of cash or other valuable assets from a person or company to another person or company.
Period cost- expense that is not inventoriable; it is charged against sales revenue in the period in which the revenue is earned, also called period expense. Selling and general and administrative expenses are period costs.
Over applied overhead: A situation in which the overhead applied to a work in progress (WIP) product is more than the overhead that the WIP actually incurs. This results in the manufacturing overhead having a credit balance. Over applied overhead is reported on the balance sheet and is reported as unearned revenue. At the end of the year, over applied overhead is balanced by creating a credit to Cost of Goods Sold. Opposite of under applied overhead.
Under applied overhead: A situation in which the overhead applied to a work in progress (WIP) product is less than the overhead that the WIP actually incurs. This results in the manufacturing overhead having a debit balance. Under applied overhead is reported on the balance sheet as a prepaid expense. At the end of the year, under applied overhead is balanced by creating a debit to Cost of Goods Sold.
Activity-based costing (ABC) is a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each: it assigns more indirect costs (overhead) into direct costs.