When Does Budgeted Fixed Overhead Differ from Applied Fixed Overhead

question 24

Multiple Choice

When does budgeted fixed overhead differ from applied fixed overhead? (Assume the number of machine hours is the activity base.)

• A) During any period in which the number of standard machine hours allowed differs from the budgeted or planned activity level.
• B) It always differs.
• C) During any period in which actual overhead costs exceed planned overhead costs.
• D) During any period in which budgeted production equals planned production.

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method or decision.

Product Development

The process of creating, designing, and bringing a new product to the market.

New Product

A good, service, or idea that is perceived by some potential customers as new and that is introduced to the market.

Consultative Decisions

Are made by one individual after seeking input from or consulting with members of a group.