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:

Total Cost Variance

measures the difference between the actual cost of producing something and its standard cost, highlighting efficiency and budgeting issues.

Variable Factory Overhead

Costs in manufacturing that fluctuate with the level of production, such as utilities or materials.

Direct Materials

Raw materials that are directly incorporated into a finished product and can easily be traced to the product.

Quantity Variance

The difference between the expected and actual quantities of inputs used in the production process, affecting the cost of goods sold.