During a typical accounting cycle, if the assigned indirect cost is $2000 but the actual cost incurred is $2200, how is this situation classified?

Multiple choice question for Job Costing. Select an option, then review the explanation below.

Explanation

When the allocated indirect cost ($2000) is less than the actual indirect cost ($2200), it results in an over allocated budget. This means the budgeted amount was insufficient to cover the actual expenses.

Practice related questions from the same subject.

1.Given that the planned direct labor hours amount to 3,550 and the labor cost rate is $500 per hour, what is the total direct labor expense?
2.What term describes the scenario where a cost object is associated with a specific job, customer, or product?
3.In normal costing, what is determined by multiplying the budgeted overhead rate by the actual quantity of the allocation base used?
4.Given an indirect cost pool budget of $139,600 and a total cost allocation base amounting to $155,600, what is the budgeted indirect cost rate?
5.Given a budgeted indirect cost rate of $225 and a budgeted allocation base of 750 hours, what is the total annual budgeted indirect cost?

During a typical accounting cycle, if the assigned indirect cost is $2000 but the actual cost incurred is $2200, how is this situation classified?

Explanation

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