1. What is overapplied overhead? When Cost of Goods Sold is adjusted for overapplied overhead, will the cost increase or decrease? Why?
2. Suppose that you and a friend decide to set up a lawn mowing service next summer. Describe the source documents that you would need to account for your activities.
3. Why might a company decide to use departmental overhead rates instead of a plantwide overhead rate?
4. What is the role of materials requisition forms in a job-order costing system? Time tickets? Predetermined overhead rates?