When using a normal costing system,only over- or under-applied overhead cost needs to be adjusted to the actual overhead cost.

Question

Quizplus · Accepted Answer

In a normal costing system, the overhead cost applied to products is calculated using a predetermined overhead rate based on estimated costs for the period. This means that at the end of the period, there may be a difference between the applied and actual overhead costs. To adjust for this difference, only the over- or under-applied overhead cost needs to be adjusted to the actual overhead cost.

When Using a Normal Costing System,only Over- or Under-Applied Overhead