Which of the Following Statements Is Incorrect

question 4

Multiple Choice

Which of the following statements is incorrect?

• A)External financial reporting requirements call for allocating manufacturing overhead to work-in-process inventory.
• B)Variable overhead is allocated on the basis of production expected to be achieved over a number of periods after taking planned maintenance into consideration (normal capacity).
• C)Over/underabsorbed overhead can be reported on the income statement or allocated among inventory accounts on the balance sheet.
• D)Proration of over/underabsorbed overhead is chosen when it will alter an investment decision.
• E)Firms involved in cost-plus projects will choose to recost each job because the firm's revenue is tied to its costs.

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Definitions:

Profits and Losses

Financial gains when revenues exceed expenses or financial losses when expenses surpass revenues, respectively.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Future Value

The value of a current asset at a future date based on an assumed rate of growth over time.

Free-Land Era

A historical period characterized by the availability and acquisition of land for free or at minimal cost, often associated with westward expansion in the United States.