Underapplied Overhead Occurs When Actual Overhead Costs Are Lower Than

question 34

True/False

Underapplied overhead occurs when actual overhead costs are lower than overhead costs applied to jobs.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the activities that drive these costs.

Unit Product Cost

The total cost incurred to produce, manufacture, or acquire a product, divided by the number of units produced.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, often used as a basis for assigning costs to products.

Manufacturing Overhead

Indirect factory-related costs that support the production process but cannot be directly traced to specific products, such as maintenance and utilities.