If Manufacturing Overhead Has a Debit Balance at the End

question 83

Multiple Choice

If Manufacturing Overhead has a debit balance at the end of the period then

• A) overhead has been underapplied.
• B) the overhead assigned to Work in Process Inventory is more than the overhead incurred.
• C) overhead has been overapplied.
• D) management must take corrective action.

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Definitions:

Credit Sales

Transactions where goods or services are provided to a customer with an agreement to pay at a later date.

Operating Expenses

Expenses related to the normal operations of a business, excluding the cost of goods sold.

Direct Labour Budget

A budget that forecasts the expense of direct labor needed to achieve manufacturing targets.

Labour Rate

The standard or actual cost paid per hour of labor, used in calculating the total cost of production or services.