Job-Order Costing Fundamentals

Applied overhead is calculated based on expenses from the previous period.

Actual overhead includes only variable costs, while applied overhead includes fixed costs.

Actual overhead is based on estimates, while applied overhead is actual costs.

Actual overhead is incurred costs during a period, while applied overhead is estimated. (correct)

It is added to COGS to reflect actual costs incurred.

It has no effect on COGS; it is ignored.

It is subtracted from COGS to adjust for excess applied overhead. (correct)

It is directly expensed and does not affect COGS.

It is subtracted from COGS to reflect overapplication.

It is added to COGS to account for the shortfall in applied overhead. (correct)

It is directly expensed on the income statement.

It is ignored and not adjusted in COGS.

<p>By dividing estimated total manufacturing overhead costs by the estimated allocation base.</p> Signup and view all the answers

<p>Actual overhead is incurred costs; applied is the estimated costs charged to jobs.</p> Signup and view all the answers

<p>In service businesses or custom manufacturers where each job is unique.</p> Signup and view all the answers

<p>To estimate production costs before actual overhead is known.</p> Signup and view all the answers

<p>It requires tracking direct materials, direct labor, and overhead for each job.</p> Signup and view all the answers