Multiple choice

Directions: Choose the correct option for the given question.

______ should be apportioned among cost of goods sold and applicable to inventory.

  1. Under applied factory overhead cost

  2. Over applied factory overhead cost

  3. Both (1) and (2)

  4. Either (1) or (2)

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When overheads are under or over-applied, the variance must be disposed of. The standard practice is to apportion the variance among cost of goods sold and the ending inventory to accurately reflect the actual costs.

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