[amp_mcq option1=”applied indirect cost” option2=”applied direct cost” option3=”incurred indirect cost” option4=”over allocated indirect cost” correct=”option4″]
The correct answer is D. over allocated indirect cost.
An allocated indirect cost is a cost that is assigned to a cost object, such as a product or service, based on a predetermined allocation base. The actual incurred indirect cost is the actual cost of the indirect costs incurred during a period.
In this case, the allocated indirect cost is $1500 and the actual incurred indirect cost is $1200. This means that the company has over allocated indirect costs by $300. This can happen if the allocation base is not accurate or if the actual costs are higher than expected.
Applied indirect cost is a cost that is assigned to a cost object based on the actual usage of the cost object. Applied direct cost is a cost that is directly associated with the production of a product or service. Incurred direct cost is the actual cost of the direct costs incurred during a period.
I hope this helps!