If the Overhead Control Account Has a Debit Balance at the End

question 107

Multiple Choice

If the overhead control account has a debit balance at the end of the period, then:

• A) overhead is overapplied and cost of goods sold is understated
• B) overhead is underapplied and cost of goods sold is overstated
• C) overhead is underapplied and cost of goods sold is understated
• D) overhead is overapplied and cost of goods sold is restated

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Definitions:

Supply and Demand

Fundamental economic model that explains how the interaction between the quantity of a good or service available (supply) and the desire for it (demand) determines its price.

Consumers

Individuals or entities that purchase goods and services for personal use or consumption.

External Costs

Costs incurred as a result of an economic activity that affects third parties who did not choose to incur that cost.

Free Enterprise

An economic system where private businesses operate in competition, largely free of state control, with the prices of goods and services determined by the open market.