If Manufacturing Overhead Has a Credit Balance at the End

question 126

Multiple Choice

If Manufacturing Overhead has a credit balance at the end of the period then

• A) overhead has been underapplied.
• B) the overhead assigned to Work in Process Inventory is less than the overhead incurred.
• C) overhead has been overapplied.
• D) management must take corrective action.

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Definitions:

Units-Of-Production Method

A depreciation method that allocates the cost of an asset over its useful life based on the amount of production or use during the period.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or other declines in value.

Fixed Asset Turnover Ratio

A financial metric used to evaluate how effectively a company uses its fixed assets to generate sales.

Operating Income

The profit realized from a business's core operations, calculated before interest and taxes.