For an Automobile Company, the Total Overhead Applied Was $48,000,000

question 89

Multiple Choice

For an automobile company, the total overhead applied was $48,000,000 at the end of the year.Actual overhead was $52,850,000.Closing over/under applied overhead into cost of goods sold would cause net income to:

• A) increase by $4,850,000.
• B) decrease by $4,850,000.
• C) stay the same.
• D) decrease by $400,000.

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Definitions:

Break-Even Point

The point at which total cost and total revenue are equal, meaning no net loss or gain, and one has "broken even."

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors hold true.

Contribution Margin

The difference between sales revenue and variable costs, measuring the ability of a business to cover its fixed costs.

Sales Mix

Sales mix is the proportion of different products or services that a company sells, reflecting the variety of sales contributing to total revenue.