Economic Theory

question 1

Multiple Choice

Economic theory

• A)expresses normative values
• B)invents imaginative and interesting stories
• C)predicts the behavior of a specific economic decision maker after an economic change
• D)predicts the average behavior of a group of similar economic decision makers after an economic change
• E)uses only perfect and complete information

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Definitions:

Underapplied Overhead

The situation where the allocated manufacturing overhead is less than the actual overhead incurred, leading to an adjustment need in accounting records.

Adjusting Entry

An accounting journal entry made to amend the preliminary financial records before preparing financial statements.

Manufacturing Overhead

Indirect costs related to manufacturing, including utilities, rent for manufacturing facilities, and equipment maintenance, not directly tied to individual units produced.

Overapplication of Overhead

A situation where the allocated overhead costs exceed the actual overhead costs incurred.