If Manufacturing Overhead Has Been Underallocated During the Period, and Most

question 232

Multiple Choice

If manufacturing overhead has been underallocated during the period, and most of the jobs produced have been sold, then

• A) cost of goods sold should be decreased.
• B) cost of goods sold should be increased.
• C) finished goods inventory should be increased.
• D) work in process inventory should be decreased.

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Definitions:

Gross Profit

delineates the profit a company makes after subtracting the costs directly associated with making its products or providing its services.

Direct Labor

The labor costs associated with workers who are directly involved in the production of goods or provision of services.

Total Manufacturing Costs

The aggregate cost of direct materials, direct labor, and manufacturing overhead incurred in the production of goods.

Work in Process Inventory

The stock of partially finished goods still undergoing manufacturing processes.