An Increase in Price

question 53

Multiple Choice

An increase in price:

• A) cannot cause a quantity effect.
• B) cannot cause a price effect.
• C) causes a decrease in revenue resulting from selling fewer units and a simultaneous increase in revenue resulting from receiving a higher price.
• D) causes an increase in quantity demanded.

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Definitions:

Overapplied

A situation where the overhead applied to products is greater than the actual overhead incurred.

Underapplied

Refers to a situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products during a specific period.

Manufacturing Overhead

Overhead costs related to the manufacturing process, including indirect labor, indirect materials, and other expenses not directly linked to the production.

Budget Variance

The difference between budgeted amounts and actual amounts for revenues, expenses, or other financial metrics.