What is a characteristic of actual overhead using normal costing?
A) It is estimated easily at the beginning of the period.
B) It is reconciled at the end of a period with applied overhead.
C) It is recorded to the overhead control account at the beginning of the period.
D) It is separated into many smaller accounts, such as indirect labour and supplies.

Question

Quizplus · Accepted Answer

Actual overhead using normal costing is reconciled at the end of a period with applied overhead. This process helps to identify any variances and adjust the applied overhead rate for future periods. A is incorrect because actual overhead is not estimated but rather recorded based on actual costs incurred. C is incorrect because overhead is initially recorded to a pre-established overhead allocation account, not the overhead control account. D is incorrect because actual overhead is not separated into many smaller accounts but rather recorded as a lump sum.

What Is a Characteristic of Actual Overhead Using Normal Costing