Question

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be over applied

True or False

Answer 1

The statement is false because when actual manufacturing overhead costs exceed applied costs, it results in under-applied overhead, not over-applied.

Step-by-step explanation:

The statement that if the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be over-applied is False. When the actual manufacturing overhead costs are higher than the costs that have been applied to the product, it means that there is under-applied overhead.

Conversely, if the applied manufacturing overhead is more than the actual overhead costs, then the overhead is over-applied. In other words, 'over applied' means the company applied more overhead to its production than it incurred, and 'under applied' means it applied less.