An Increase in Demand and a Decrease in Supply Will

question 167

Multiple Choice

An increase in demand and a decrease in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.

• A)decrease;decrease
• B)indeterminate change;increase
• C)indeterminate change;decrease
• D)increase;indeterminate change

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Definitions:

Underapplied Overhead

Underapplied overhead occurs when the allocated amount of overhead costs in a costing system is less than the actual overhead incurred.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants and cleaning supplies.

Production

The process of creating goods and services.

Manufacturing Overhead

Indirect costs associated with the manufacturing process, including utilities, rent, and salaries not directly tied to production.