Question

After posting all actual factory overhead and applying factory overhead to production departments in a process costing system,

A. There will never be underapplied overhead.
B. There will never be overapplied overhead.
C. There will always be underapplied overhead.
D. There will always be overapplied overhead.
E. There may be over or underapplied overhead

Answer 1

Answer: The correct answer is "E. There may be over or underapplied overhead "

Explanation: After posting all actual factory overhead and applying factory overhead to production departments in a process costing system, there may be over or underapplied overhead depending on whether the real factory overhead are greater or smaller than the applied factory overhead.

If the actual are greater than those applied: underapplied overhead

If the actual are less than those applied: overapplied overhead.