Accounting: Actual and Applied

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1. The most common treatment of the underapplied overhead at the end3of
the year would be to:

a. carry it as a deferred charges on the balance sheet

b. report it as a miscellaneous expense on the income statement
c. debit it to Cost of Goods Sold
d. prorate between Work in Process Inventory and Finished Goods
Inventory

2. An objection to the use of predetermined overhead rate based on direct

labor costs is that:

a. these items are difficult to measure

b. a job is charged with more overhead when a highly paid operator works
on the job than when a low paid operator performs the work
c. overhead is allocated in relation to units produced by workers
d. overhead rates will be distributed inequitable when there are no wage
differentials in the department
3. All of the following phrases are used as alternate terminology for
manufacturing overhead except.

a. manufacturing expense
b. indirect manufacturing cost
c. factory expense
d. other expense

4. This variance measures the amount by which actual overhead is more or less
than the amount that should have been spent for the activity level attained:

a. Overhead variance.
b. Volume variance.
✓

c. Spending variance.
d. Price variance.

5. This variance is the difference between the actual manufacturing overhead

incurred and the applied manufacturing overhead.
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a. Capacity variance.
b. Budget variance.
c. Spending variance.
d. Material variance.

6. The difference between the actual manufacturing overhead incurred and the
budgeted overhead based on a budget capacity used is:

a. Controllable variance.
b. Volume variance.
c. Overhead variance.
d. Price variance.

7. What does a favorable variance represent?

a. The actual overhead costs were less than the costs applied to production.
b. The actual overhead costs were more than the costs applied to
production.
c. The spending variance is more than the volume variance.
e spen ng var.c'ice is less than the volume variance.
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