If a firm was going to error in one direction or another on purpose, would we...
If a firm was going to error in one direction or another on purpose, would we expect the firm to error on the side of over-applying overhead or under applying overhead? why?
Homework Answers
Defianation : The over or under applied manufacturing overhead is the differance between manufacturing overhead cost applied to work-in-progress and manufacturing overhead cost actually incurred during a period.
Over applied manufacturing Overhead
Applied Overhead > Actual overhead
Under applied manufacturing Overhead
Applied Overhead < Actual overhead
The Over or Under applying of overheards will be observed under the following situations
i) Baesd on efficiency of workers avaliable.
ii)Avaliable of the labour hours.
iii)Avaliability of the raw materal stock
There are some more situations where they all under these three major situations
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