Under-Applied Overhead at the End of a Month

question 98

Multiple Choice

Under-applied overhead at the end of a month:

• A)Results when actual overhead costs are less than amounts applied to work in process.
• B)Indicates a poorly designed cost accounting system.
• C)Is represented by a debit balance remaining in the Manufacturing Overhead account.
• D)Is represented by a credit balance remaining in the Work in Process Inventory account.

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Definitions:

Negotiation

The process whereby parties discuss their differences and attempt to reach a mutually agreeable resolution.

Indorses

Endorses or signs the back of a financial instrument (such as a check) to transfer rights to another party.

Credit Union

A member-owned financial cooperative that provides banking services, including savings and loan facilities, to its members.

Shelter Principle

The principle that the holder of a negotiable instrument who cannot qualify as a holder in due course (HDC), but who derives his or her title through an HDC, acquires the rights of an HDC.