Wintergreen Products Allocates Overhead Based on Direct Labor Hours

question 8

Multiple Choice

Wintergreen Products allocates overhead based on direct labor hours. During 2011 overhead was overapplied by $4,000. Assuming that the year-end adjustment to clear out the overapplied overhead has not yet been done, which of the following statements is most likely trueif there are no ending inventories?

• A) Direct material costs are understated
• B) Direct labor costs are understated
• C) Cost of goods sold is overstated
• D) Net income is overstated

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Definitions:

Involuntary Reflex Responses

Automatic, rapid responses of the nervous system to a stimulus that do not require conscious thought, protecting the body from harm.

Group Mean

A statistical measure that represents the average value of data points within a specified set or group.

Average Reaction Time

The typical duration it takes for an individual to respond to a stimulus.

Voluntary Reaction

involves conscious control over actions or movements, such as deciding to grab a cup of coffee.