Which of the following is true?
A) The adjusted cost of goods sold is equal to normal cost of goods sold plus or minus the overhead variance.
B) If the overhead variance shows overapplied overhead, then that amount would be subtracted from normal cost of goods sold.
C) Variances in overhead are expected every month.
D) All of these.
E) None of these.

Question

Quizplus · Accepted Answer

All the statements are correct regarding the treatment and expectations of overhead variances in accounting. Adjusted cost of goods sold does take into account the overhead variance by adjusting the normal cost of goods sold. If there's an overapplied overhead, it means that the actual overhead costs were less than what was applied based on the standard costing system, so this excess is subtracted from the normal cost of goods sold to adjust it. Lastly, it is normal to expect variances in overhead due to fluctuations in production levels, costs, or estimation inaccuracies, making such variances a common occurrence.

Which of the Following Is True