Overapplied Overhead Will Always Result When a Predetermined Factory Overhead

question 59

Multiple Choice

Overapplied overhead will always result when a predetermined factory overhead rate is employed and:

• A)Overhead incurred is more than overhead applied.
• B)Overhead incurred is less than overhead applied.
• C)Production is greater than sales.
• D)Actual overhead costs are more than expected.

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Definitions:

Machine Hours

The total number of hours that machines are used or operated during a specific time period, often used as a basis for allocating manufacturing overhead.

Direct Labor Hour

A measure of the time spent by workers manufacturing a product or delivering a service.

Special Materials

Unique or unusual materials required for specific production processes or products, often implying additional cost or procurement effort.

Step-fixed Costs

Expenses that remain constant over a range of production but can change when production exceeds certain levels.