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A) Actual overhead cost was less than the amount of direct labor cost
B) Actual overhead cost was less than the amount charged to production
C) Actual overhead cost was greater than the amount charged to production
D) None of the above
C) Actual overhead cost was greater than the amount charged to production
C is the correct answer...........
Answer C is the correct answer
C) Actual overhead cost was greater than the amount charged to production
In other words it is Under Absorption of Manufacturing costs.
If the manufacturing overhead cost applied to work in process is more than the manufacturing overhead cost actually incurred during a period, the difference is known as over-applied manufacturing overhead. On the other hand; if the manufacturing overhead cost applied to work in process is less than the manufacturing overhead cost actually incurred during a period, the difference is known as under-applied manufacturing overhead.
So here it means that the actual cost was greater than the applied cost
Ans: C- actual overhead cost was greater than the amount charged to production
The predetermined rate can be taken to mean as budgeted rate.
so when a budgeted overhead rate is determined and is debited into the account. Later when the actual overhead value is known it will be credited to the account as to set off the budgeted one against the actual one.
When the accounting period is over and when there is more value of actual overhead than the budgeted value there will be more value on the credit side than the debit side and then leaving a debit balance of overhead account.
D) None of the above
should be the right answer.
I would say the correct answer is absolutely (C) Actual overhead cost was greater than the amount charged to the production.
D)>>>>>>>>>>>>>> None of the above
My guess here is option (b)
debit balance represent Actual overhead cost was less than the amount charged to production