1. Carver Company uses a plantwide overhead rate based on direct labor cost. Sup- pose that during the year, Carver raises its wage rate for direct labor. How would that affect overhead applied? The total cost of jobs?
2. What is an overhead variance? How is it accounted for typically?
3. Is the cost of a job related to the price charged? Explain.
4. If a company decides to increase advertising expense by $25,000, how will that affect the predetermined overhead rate? Eventual cost of goods sold?
5. How can a departmental overhead system be converted to a plantwide overhead system?