The Most Widely Used Approach to Disposing of Overhead Variances

question 19

Multiple Choice

The most widely used approach to disposing of overhead variances is ________.

• A)to allocate it between finished goods inventory,work-in-process inventory and direct materials inventory
• B)to allocate it between cost of goods sold,finished goods inventory and work-in-process inventory
• C)to allocate it between cost of goods sold,finished goods inventory and direct material inventory
• D)immediate write-off

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Definitions:

Finishing Department

The section in a manufacturing process where products undergo final touches before being considered finished goods.

Predetermined Overhead Rate

An upfront calculated rate for assigning manufacturing overhead costs to products or job orders, based on estimated expenses and levels of activity.

Direct Labor-Hours

Combined working hours of staff directly participating in the manufacturing of products or provision of services.

Job-Order Costing System

An accounting system that tracks costs individually for each job, suitable for companies producing unique products or services.