How Should Material Amounts of Underapplied or Overapplied Overhead Be

question 77

Multiple Choice

How should material amounts of underapplied or overapplied overhead be disposed of?

• A)treated as an adjustment to cost of goods sold
• B)treated as an adjustment to work in process
• C)allocated to direct materials,work in process,and finished goods
• D)allocated to work in process,finished goods,and cost of goods sold

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Definitions:

Weighted-Average Method

It's a strategy to calculate the ending inventory and cost of goods sold by applying the average price of all items on offer during the timeframe.

Conversion Cost

The combination of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Process Costing

A cost accounting method used for homogenous products that are produced in a continuous flow, involving computing the cost per unit by dividing total costs by the units produced.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold based on the average cost of all items available for sale during the period.