When the actual overhead costs exceed the amount of applied overhead costs,the overhead costs are ________.At the end of the accounting period,accountants dispose of the underapplied or overapplied overhead using ________ or ________.
A) overapplied; proration; immediate write-off
B) underapplied; proration; immediate write-off
C) overapplied; flexible budget variance; proration
D) underapplied; flexible budget variance; immediate write-off

Question

Quizplus · Accepted Answer

When the actual overhead costs exceed the amount of applied overhead costs, the overhead costs are underapplied. At the end of the accounting period, accountants dispose of the underapplied or overapplied overhead using proration or immediate write-off. Therefore, option B is the correct answer as it correctly matches underapplied with proration and immediate write-off as the methods of disposal.

When the Actual Overhead Costs Exceed the Amount of Applied