When Overheads Are Over-Allocated, the Actual Overheads Incurred Are Greater

question 32

True/False

When overheads are over-allocated, the actual overheads incurred are greater than those allocated.

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Definitions:

Allocation Bases

Criteria or metrics used to distribute overhead costs to different departments or products in a company, ensuring accurate cost accounting.

Drilling Department

A division within a manufacturing or mining operation dedicated to the process of drilling, such as creating holes in the earth's surface or in materials.

Current Period

refers to the present accounting period under consideration, typically a month, quarter, or year.

Maintenance Cost

Expenses incurred in the upkeep of assets, such as machinery or buildings, to ensure their efficient operation and prolong their life.