When Too Much Overhead Cost Is Charged to Products During

question 76

Multiple Choice

When too much overhead cost is charged to products during production, the result is

• A)overapplied overhead.
• B)underapplied overhead.
• C)an understatement of cost of goods sold.
• D)an understatement of Inventory cost.

---

Definitions:

Target Profit

The desired level of profit that a business plans to achieve within a specific period.

Contribution Format

A format for income statements where all variable expenses are subtracted from sales to calculate contribution margin, which then has fixed expenses subtracted to determine net operating income.

Income Statement

A financial report that shows a company's financial performance over a specific period, including revenues, expenses, and profit or loss.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much of each sales dollar is available to cover fixed costs and generate profit.