A Company Assigned Overhead to Work in Process

question 101

Multiple Choice

A company assigned overhead to work in process. At year end what does the amount of overapplied overhead mean?

• A) The overhead assigned to work in process is greater than the estimated overhead costs.
• B) The overhead assigned to work in process is less than the estimated overhead costs.
• C) The overhead assigned to work in process is less than the actual overhead.
• D) The overhead assigned to work in process is greater than the overhead incurred.

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Definitions:

Profit-Maximizing Price

The price at which a business can sell its product or service to achieve the highest possible profit.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Kink

A sudden change in the rate or direction of a curve or line, often used in economics to describe a sharp change in a demand or supply curve.

Kinked Demand Curve

A demand curve that has a distinct bend or kink, typically used in oligopoly models, suggesting that a firm will face different elasticities for price increases versus price decreases.