What Is the Most Common Treatment of the Fixed-Overhead Budget

question 44

Multiple Choice

What is the most common treatment of the fixed-overhead budget variance at the end of the accounting period?

• A)Reported as a deferred charge or credit.
• B)Allocated among Work-in-Process Inventory,Finished-Goods Inventory,and Cost of Goods Sold.
• C)Charged or credited to Cost of Goods Sold.
• D)Allocated among Cost of Goods Manufactured,Finished-Goods Inventory,and Cost of Goods SolD.
• E)Charged or credited to Income Summary.

---

Definitions:

Accrual-Basis Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed, recognized as a liability until the obligation is fulfilled.

Unearned Rent

is income received by a landlord for rent that has been paid in advance by a tenant but has not yet been earned.

Adjust Revenue

The act of modifying the reported amount of revenue to more accurately reflect the earnings of a period, following certain accounting principles and standards.