If a Company Applies Overhead to Jobs on the Basis

question 145

Multiple Choice

If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that:

• A) more overhead cost has been charged to jobs than has been incurred during the period.
• B) more overhead cost has been incurred during the period than has been charged to jobs.
• C) the amount of overhead cost charged to jobs is greater than the estimated cost for the period.
• D) the amount of overhead cost charged to jobs is less than the estimated overhead cost for the period.

---

Definitions:

Par Value

The stated or principal value of a bond, stock share, or coupon as specified on its certificate or document.

Journal Entries

Journal entries are the record of financial transactions in the accounting books, detailing debts and credits for each account affected by the transaction.

Paid-In Capital

Funds raised by a company from equity, and not from ongoing operations, reflected on the balance sheet.

Treasury Stock

Shares that were once outstanding and have been bought back by the issuing company, reducing the amount of stock on the open market.