Question
Using normal costing to cost units of production, Steven Harper Co. has gathered the following information: Fixed manufacturing overhead was estimated to be $120,000 for
Using normal costing to cost units of production, Steven Harper Co. has gathered the following information: Fixed manufacturing overhead was estimated to be $120,000 for the year. Actual production was 40,000 units. Actual fixed manufacturing overhead costs incurred were $125,000. What is the result of this difference between the estimated fixed overhead and actual fixed overhead?
| The difference is expensed as a period cost the way variable costing immediately expenses fixed overhead as a period cost. |
| The difference is over or under-applied overhead that if immaterial, will be closed out to cost of goods sold at year end. |
| The difference will be held in inventory and taken to cost of goods sold when the units are sold next year. |
| There is no difference. |
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