If the Amount of Factory Overhead Cost Incurred Exceeds the Amount

question 2

Multiple Choice

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a

• A) debit balance and be underapplied
• B) credit balance and be underapplied
• C) credit balance and be overapplied
• D) debit balance and be overapplied

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Definitions:

Direct Labor Dollars

The total cost of wages paid to workers directly involved in manufacturing or producing a company's products.

Fabrication Department

The division within a manufacturing company responsible for constructing and assembling the products or components.

Direct Labor Hours

The total number of hours worked by employees directly involved in producing goods or providing services.

Factory Overhead Budget

An estimation of the total costs required to support the manufacturing operations, excluding direct materials and direct labor.