If a Company Applies Overhead to Production with a Predetermined

question 84

Multiple Choice

If a company applies overhead to production with a predetermined overhead rate,a credit balance in the Factory Overhead account at the end of the period means that:

• A)The bookkeeper has made an error because the debits don't equal the credits.
• B)The balance will be carried forward to the next period as an overhead cost.
• C)Actual overhead incurred was less than the overhead amount applied to production.
• D)The overhead was underapplied for the period.
• E)Actual overhead was greater than the overhead amount applied to production.

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Definitions:

Allowable Expenses

Costs that are recognized under the provisions of a contract or agreement as reimbursable or claimable.

Contractor's Fee

The payment made to a contractor for their services, typically a percentage of the total cost of a construction project.

Cost Reimbursable Contract

A type of contract where the client pays the contractor for all legitimate actual costs incurred for the project plus a fee representing the contractor’s profit.

Quality

The degree to which a product, service, or process meets specified requirements, customer expectations, or industry standards.