The budgeted overhead costs for standard hours allowed and the overhead costs applied to the product are the same amount
A)for both variable and fixed overhead costs.
B)only when standard hours allowed is less than normal capacity.
C)for variable overhead costs.
D)for fixed overhead costs.

Question

Quizplus · Accepted Answer

This statement is true for variable overhead costs because variable overheads are applied based on actual activity levels. Therefore, if the standard hours allowed (which represent the expected level of activity) are used to apply overhead, and the actual activity matches this expectation, the budgeted and applied overhead costs will align. Fixed overhead costs, on the other hand, are typically applied based on a predetermined rate and normal capacity, not on the actual or standard hours allowed, making them less likely to match exactly unless adjustments are made.

The Budgeted Overhead Costs for Standard Hours Allowed and the Overhead