Question

Which of the following statements is true when we talk about costs being "over-applied" to products during the year? Assume the no "over-applied" or "under-applied" adjustment has occurred yet.

a) Not enough direct labor costs was allocated to products
b) too much overhead cost was allocated to products
c) too much direct materials cost was allocated to products
d) too much direct labor cost was allocated to products
e) not enough overhead costs were allocated to products

Answer 1

The correct statement when costs are "over-applied" to products is that too much overhead cost was allocated to the products.

Step-by-step explanation:

The correct statement when talking about costs being "over-applied" to products during the year is option b) too much overhead cost was allocated to products.

When costs are over-applied, it means that more costs have been allocated to products than actually incurred. This can happen when the predetermined overhead rate is set too high or when the actual overhead costs are lower than expected.