COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Actual overhead costs exceed applied overhead.
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Actual overhead costs exceed budgeted overhead.
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Applied overhead exceeds actual overhead costs.
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Budgeted overhead exceeds actual overhead costs.
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Detailed explanation-1: -If the applied overhead exceeds the actual amount incurred, overhead is said to be overapplied. This is usually viewed as a favorable outcome, because less has been spent than anticipated for the level of achieved production.
Detailed explanation-2: -Over applied Overhead. Overhead that occurs when the applied overhead is greater than the actual overhead. Overhead Variance. Difference between applied overhead and actual overhead.
Detailed explanation-3: -Overapplied (overabsorbed) overhead The amount by which the overhead applied to production exceeds the actual overhead costs incurred in that same period.
Detailed explanation-4: -If manufacturing overhead has a credit balance, the overhead is overapplied, and the resulting amount in cost of goods sold is overstated.
Detailed explanation-5: -Balance the Manufacturing Overhead Account In order to determine whether overhead was over or under applied for the period, the company’s cost account balances the manufacturing overhead account. If credits exceed debits, then overhead was over applied, if debits exceed credits than overhead was under applied.