Van Noten Inc. had applied overhead of $161,000 during March and measured $168,500 of actual overhead at the completion of the month. How will the company be affected by this discrepancy after they make adjustments?

A.

Gross margin will increase by $7,500.

B.

Cost of goods sold will increase by $7,500.

C.

Sales revenue will decrease by $7,500.

D.

Cost of goods sold will decrease by $7,500.

E.

Operating expenses will increase by $7,500.

Which of the following is NOT a cause of differences between actual and applied manufacturing overhead?

A.

The use of a predetermined overhead rate treats overhead costs as if they are variable costs, when in reality most are fixed costs.

B.

The allocation base used to apply overhead is not representative of the factors that drive different overhead cost items.

C.

The estimated and actual overhead prices of the individual overhead items are different.

D.

The cost of raw materials used in production increased in price over the course of the accounting period.

E.

All of the above are causes of differences between actual and applied manufacturing overhead.