Manufacturing overhead is applied to each job
A) at the time when the overhead cost is incurred.
B) by means of a predetermined overhead rate.
C) at the end of the year when actual costs are known.
D) only if the overhead costs can be directly traced to that job.

Question

Quizplus · Accepted Answer

Manufacturing overhead is applied to each job by means of a predetermined overhead rate. This rate is based on estimated overhead costs and estimated activity levels. It is applied to each job based on the estimated amount of overhead that the job will require. Actual overhead costs are later compared to the estimated amount, and any differences are recorded as overhead adjustments.

Manufacturing Overhead Is Applied to Each Job