If a Company Applies Overhead to Production with a Predetermined

question 84

Multiple Choice

If a company applies overhead to production with a predetermined overhead rate,a credit balance in the Factory Overhead account at the end of the period means that:

• A)The bookkeeper has made an error because the debits don't equal the credits.
• B)The balance will be carried forward to the next period as an overhead cost.
• C)Actual overhead incurred was less than the overhead amount applied to production.
• D)The overhead was underapplied for the period.
• E)Actual overhead was greater than the overhead amount applied to production.

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Definitions:

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved in a market.

Administrative Cost

Expenses related to the general operation of a business, including office supplies, salaries of non-production staff, and rent.

Efficiency

The extent to which resources are utilized to their maximum potential, minimizing waste and maximizing output or outcomes.

Proportional Income Tax

A tax system where the tax rate remains constant regardless of the amount of income earned, meaning taxpayers pay the same percentage of their income in taxes.