Question

If overhead is overapplied, it means that individual jobs have not been charged enough overhead during the year and the cost of goods sold reported is too low.Group startsTrue or False

Answer 1

Answer:

True

Explanation:

At the end of the manufacturing period the overhead cost applied to manufactured goods are compared to actual cost incurred.

If, Actual Overheads > Applied overheads, we say overheads are underapplied. this means the cost of goods sold has been charged too little and must be increased.

and

If, Applied Overheads > Actual overheads, we say overheads are overapplied. this means the cost of goods sold has been charged too much and must be lowered.