Sharp Company's Records Show That Overhead Was Overapplied by $10,000

question 22

Multiple Choice

Sharp Company's records show that overhead was overapplied by $10,000 last year.This overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year.In trying to determine why overhead was overapplied by such a large amount,the company has discovered that $6,000 of depreciation on factory equipment was charged to administrative expense in error.Given the above information,which of the following statements is true?

• A)Manufacturing overhead was actually overapplied by $16,000 for the year.
• B)The company's net income is understated by $6,000 for the year.
• C)Under the circumstances posed above,the error in recording depreciation would have no effect on operating income for the year.
• D)The $6,000 in depreciation should have been charged to Work-in-Process rather than to administrative expense.

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Definitions:

Source Of Sound

The point or object from which sound waves originate, which can be anything that vibrates to create audio frequencies.

Basilar Membrane

A key structure in the cochlea of the inner ear, which plays a crucial role in sound perception by responding to different frequencies.

Nerve Deafness

A type of hearing loss that occurs when the auditory nerve or the hair cells in the cochlea are damaged, making it hard to send sound signals to the brain.

Heredity

The passing of traits from parents to offspring through genes, influencing characteristics like eye color, height, and susceptibility to certain diseases.