Which of the Following Statements About Under- or Overapplied Manufacturing

question 36

Multiple Choice

Which of the following statements about under- or overapplied manufacturing overhead is correct?

• A) After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted Manufacturing Overhead will have a zero balance.
• B) When Manufacturing Overhead has a credit balance overhead is said to be under-applied.
• C) At the end of the year under- or overapplied overhead is eliminated by a closing entry.
• D) When annual financial statements are prepared overapplied overhead is reported in current liabilities.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a state of balance in the market.

Equilibrium Quantity

The amount of goods or services supplied that is exactly equal to the amount of goods or services demanded at a particular price level.

Demand

The total amount of a product or service that consumers are willing and able to purchase at various price levels at a given time.

Price Range

The spread between the highest and lowest prices of goods or services in the market.