One reason indirect costs may be overapplied is because:

Question

Quizplus · Accepted Answer

Overapplication of indirect costs occurs when budgeted indirect costs exceed actual indirect costs. This means that more indirect costs have been allocated to production than were actually incurred, resulting in higher than necessary costs for the products. Option A is incorrect because it refers to overallocating indirect costs, which is not the same as overapplying. Option B is incorrect because it refers to direct materials, which do not affect the application of indirect costs.

One Reason Indirect Costs May Be Overapplied Is Because