Question

If there is a debit balance in overhead control, that implies

a. actual overhead costs exceed overhead applied.
b. applied overhead exceeds actual overhead.
c. actual overhead has not been closed to cost of goods sold.
d. none of the above.

Answer 1

A debit balance in overhead control means actual overhead costs exceed overhead applied, which confirms that the company's actual expenses on overhead were more than what was anticipated and applied to products or services.

Step-by-step explanation:

If there is a debit balance in overhead control, that implies actual overhead costs exceed overhead applied. This means that the company has spent more on overhead than it has charged to its products or services through the applied overhead rate. If the applied overhead were higher than the actual overhead costs, there would be a credit balance instead.

To address the specifics of this question:

• Option (a) is correct because it accurately describes what a debit balance in overhead control represents.
• Option (b) would result in a credit balance, not a debit balance.
• Option (c) is a separate process and does not directly explain a debit balance in overhead control.
• Option (d) is incorrect because one of the previous options provides the correct scenario for a debit balance in overhead control.