Underallocated Manufacturing Overhead Results When

question 149

Multiple Choice

Underallocated manufacturing overhead results when

• A)production is greater than last year.
• B)actual overhead is greater than expected.
• C)actual overhead is greater than allocated overhead.
• D)estimated overhead is greater than actual overhead.

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Definitions:

Costs

An amount that must be paid or spent to buy or obtain something.

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of supervisors, not directly tied to a specific product.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Conversion Costs

The sum of labor and overhead expenses incurred in the process of converting raw materials into finished goods.