Factory overhead can be over-or under-applied because:

Question

Quizplus · Accepted Answer

Factory overhead may be over-or under-applied due to any or all of the reasons mentioned in options A, B, and C. Actual overhead costs may vary from the expected due to changes in material costs, labor costs, and other unforeseen expenses. Unexpected costs may arise due to equipment breakdown, power outage, or other factors beyond the control of the management. Production volume may vary from the anticipated level, leading to over-or under-application of overhead costs. Therefore, option D is the best choice as it covers all the possible reasons for over-or under-application of factory overhead.

Factory Overhead Can Be Over-Or Under-Applied Because