Herald Manufacturing Company Uses a Predetermined Overhead Rate to Allocate

question 64

Multiple Choice

Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis.At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated.Based on this information alone:

• A) The correct amount of cost was assigned to products during the accounting period.
• B) Too much cost was assigned to products during the accounting period.
• C) Too little cost was assigned to products during the accounting period.
• D) The answer cannot be determined from the information provided.

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Definitions:

Accounts Payable Balance

The total amount of money owed by a company to its creditors or suppliers at a specific point in time.

Sales for Quarter

The total revenue generated from sales activities within a specific three-month period of the fiscal year, used to analyze the company's performance and growth.

Cash Collections

The process of gathering all receivables or cash owed by customers to a business within a specified period.