Examlex
The strict scrutiny test holds that:
Underapplied Overhead
Happens when the overhead costs assigned to manufacturing are lower than the overhead expenses that were actually incurred.
Actual Overhead
Actual overhead refers to the direct costs actually incurred by a business for operations, including utilities, rent, and maintenance expenses.
Overhead Applied
The portion of overhead costs allocated to individual products or services based on an estimated or predetermined rate.
Direct Materials
Raw materials that are directly traceable to the manufacturing of a product and are considered variable costs, forming part of the inventory costs.
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