If the actual amount of manufacturing overhead cost incurred exceeds the amount applied, it indicates that the factory overhead account is which of the following? Group of answer choices Under-allocated and will have a debit balance Over-allocated and will have a debit balance Over-allocated and will have a credit balance Under-allocated and will have a credit balance

If the actual amount of manufacturing overhead cost incurred exceeds the amount applied, it indicates that the factory overhead account is which of the following? Group of answer choices Under-allocated and will have a debit balance Over-allocated and will have a debit balance Over-allocated and will have a credit balance Under-allocated and will have a credit balance

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

If the actual amount of manufacturing overhead cost incurred exceeds the amount applied, it indicates that the factory overhead account is which of the following?

Group of answer choices

Under-allocated and will have a debit balance

Over-allocated and will have a debit balance

Over-allocated and will have a credit balance

Under-allocated and will have a credit balance

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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