What Method Is Not Acceptable for Closing the Balance in the Manufacturing

question 42

Short Answer

What method is not acceptable for closing the balance in the manufacturing overhead control accounts? a. Post any over or underapplied overhead directly to cost of goods sold
B) Correct the rates for the entire year, once actual overhead costs are known
C) Prorate the under or overapplied overhead amount between the inventory accounts
D) Show overapplied costs as revenue and underapplied costs as an expense directly on the income statement

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Definitions:

Present Value Method

An approach to evaluate the current worth of a future cash flow, considering a specific rate of interest or cost of capital.

Capital Investment Analysis

The process of assessing the viability, stability, and profitability of long-term investments to determine their potential impact on the financial health of an entity.

Cash Payback Method

A capital budgeting technique that calculates the time needed to recoup the cost of an investment, based on cash inflows.

Net Cash Inflows

The amount of cash that a company receives minus the cash it spends over a period.