Difference between actual factory overhead cost and applied factory overhead are known as a variance. Where the
Question:
Difference between actual factory overhead cost and applied factory overhead are known as a variance. Where the applied cost is greater than the actual cost, it is favorable varianceorover applied factory head, but where the applied cost is lesser than the actual cost, it is unfavorable varianceorunderapplied factory overhead. Over or underapplied factory overhead cost is adjusted to the entire production, cost of goods sold,ornet profit.
Considering the given information, it is assumed that adjustment of over-applied factory overhead cost to entire production is better than closing it to the net profit. Do you agree with the statement or not? Support your answer with justification.
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr