If Applied Overhead Exceeds Actual Overhead,cost of Goods Sold Must

question 59

True/False

If applied overhead exceeds actual overhead,cost of goods sold must be increased by the amount of the overapplied overhead in a job order costing system.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for management.

Direct Labor-Hours

Direct labor-hours are the total hours worked by employees directly involved in manufacturing a product or delivering a service.

Standard

A benchmark or a set level of performance or achievement that is established for a process or product.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated, based on the efficiency of operations.