Asked by Estefania Carlos on Jun 03, 2024
Verified
The amount of overhead applied to jobs using a predetermined (budgeted) rate is rarely equal to the actual cost of overhead incurred for a period. Which of the following is not a valid explanation for this?
A) Actual spending for overhead is not equal to budgeted spending for overhead.
B) Actual use of the overhead allocation base is not equal to the budgeted use of the allocation base.
C) Budget estimates of overhead were unrealistically low.
D) Direct costs were unexpectedly high.
Overhead Applied
The portion of overhead costs allocated to specific jobs or production activities based on a predetermined rate.
Predetermined Rate
An estimated cost rate established before the start of a period and used to apply costs uniformly throughout the period.
Actual Cost
The realized expenses incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.
- Comprehend the computation and determination of fixed overhead rates and their impacts.
Verified Answer
Learning Objectives
- Comprehend the computation and determination of fixed overhead rates and their impacts.
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