If a Company Mistakenly Counts Less Items During a Physical

question 113

Multiple Choice

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?

• A) understated
• B) overstated
• C) no change
• D) only inventory will be affected

Understand the selection of activity bases in automated manufacturing operations including machine hours.

Calculate overhead costs applied to a specific job based on varying activity bases.

Understand the application of overhead based on direct labor costs and calculate total manufacturing costs.

Recognize the recording of overhead application in accounting records.

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Definitions:

Systems Thinker

An individual who understands how parts of a whole interact with each other within a system, recognizing patterns and interrelationships.

External Environment

Refers to all external forces that can affect an organization’s performance, including economic, technological, social, and legal factors.

Short-Range Benefits

Advantages or positive outcomes that are achieved in a relatively short period following a particular action or decision.

Managing Emotions

The ability to recognize, understand, and appropriately express one's emotions in a way that promotes emotional well-being and interpersonal relationships.