When Job Costing Is in Use, Under-Applied Overhead

question 99

Multiple Choice

When job costing is in use, under-applied overhead:

• A) Represents the cost of manufacturing overhead that relates to unfinished jobs.
• B) Is indicated by a credit balance remaining at year-end in the Manufacturing Overhead account.
• C) Is closed out at year-end into the Cost of Goods Sold account if the amount is not material.
• D) Results when actual overhead costs incurred during a year are less than the amounts applied to individual jobs.

---

Definitions:

Regular Price

The standard or usual cost of an item or service without any discounts, promotions, or special offers applied.

Operating Expenses

Definition: Costs associated with the day-to-day operations of a business, excluding cost of goods sold.

Sears

A former major American chain of department stores known for selling a wide range of products, from clothing to appliances.

Breakeven Price

The amount of money for which selling a product or service neither results in a profit nor a loss.