Conceptually Any Under- or Overapplied Overhead at the End of the Year

question 10

Multiple Choice

Conceptually any under- or overapplied overhead at the end of the year should be allocated among all of the following except

• A) cost of goods sold.
• B) ending work in process inventory.
• C) ending raw materials inventory.
• D) ending finished goods inventory.

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Definitions:

Variable Cost Concept

The variable cost concept implies costs that vary directly with the level of production or sales volume, such as materials and labor.

Markup

The amount added to the cost price of goods to cover overhead and profit when determining the selling price.

Total Cost Concept

An approach that takes into account all costs associated with the production and distribution of goods or services.

Cost-Plus Approach

A pricing strategy where a fixed percentage or amount of profit is added on top of the cost to produce or purchase goods or services.