Normal Costing Flashcards
1
Q
Normal costing system
A
Application of overhead using the budgeted overhead costs and budgeted quantity of allocation base BUT all other information in the costing system is based on actual costs
2
Q
Allocating overhead in normal costing
A
Budgeted overhead rate x actually quantity of allocation base
3
Q
Misapplied overhead
A
Occurs when budgeted overhead rate differs from the actual overhead rate
If less overhead is applied than actual incurred = underapplied overhead (or underallocated or underabsorbed)
If more overhead is applied than actually incurred = over applied (overallocated, over absorbed) overhead
