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.

Question

Quizplus · Accepted Answer

Over or underapplied overhead can occur if the estimated overhead rate was different from the actual overhead rate or if the estimated production activity was different from the actual production activity. Therefore, there may be over or underapplied overhead after posting all actual factory overhead and applying factory overhead to production departments in a process costing system.

After Posting All Actual Factory Overhead and Applying Factory Overhead