If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that:
A)the amount of overhead cost charged to jobs is less than the estimated overhead cost for the period.
B)more overhead cost has been charged to jobs than has been incurred during the period.
C)the amount of overhead cost charged to jobs is greater than the estimated cost for the period.
D)more overhead cost has been incurred during the period than has been charged to jobs.

Question

Quizplus · Accepted Answer

A credit balance in the Manufacturing Overhead account indicates that more overhead cost has been applied to jobs than the actual overhead costs incurred during the period. This means the company has over-applied its overhead costs.

If a Company Applies Overhead to Jobs on the Basis