Question

An employee has accidently recorded advertising expense of $5,000 as a factory overhead expense. Which of...

An employee has accidently recorded advertising expense of $5,000 as a factory overhead expense. Which of the following is an effect of this error?

a). Unit cost will be overstated
b) Operating expenses will be overstated
c) Cost of goods manufactured will be understated
d) Net income will be understated
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer:

In case an employee recorded advertising expense of $5,000 as a factory overhead expense Unit cost will be overstated because factory overhead are part of those fixed costs which are than further divided into per unit cost.

Similarly if factory overhead increases, per unit cost will increase simultaneously.

So correct answer is option A.

You can ask your queries in comment section. Please rate if you found this helpful.

Add a comment
Know the answer?
Add Answer to:
An employee has accidently recorded advertising expense of $5,000 as a factory overhead expense. Which of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • A bookkeeper erroneously recorded the accrual of revenue using this journa Sales Discount Depreciation Expense The...

    A bookkeeper erroneously recorded the accrual of revenue using this journa Sales Discount Depreciation Expense The effect of this error on Total Expenses and Total Assets (respectively Select one: a. No Error, Understated Ob. Overstated, Understated c. No Error, No Error Od. Understated, No Error e. Understated, Understated The Vlasik Company declared an $8 cash dividend and recorded this journal entry (assume the amount is accurate, but not necessarily the accounts): Unearned Revenue Prepaid Insurance 58 Indicate the effect of...

  • I need the answers of questions 4 and 5 with explainations 4. An employee accidentally overstated...

    I need the answers of questions 4 and 5 with explainations 4. An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error? A. Cost of goods manufactured will be overstated by $50,000. B. Cost of goods sold will be overstated by $50,000. C. Both cost of goods manufactured and cost of goods sold will be overstated by $50,000. D. Cost of goods sold will be overstated by $50,000, and...

  • Assume you mistakenly treated the cost of production labor as a period cost (operating expense) and...

    Assume you mistakenly treated the cost of production labor as a period cost (operating expense) and you sold all but one of the quilts you made (for the same price calculated in #1, $17.15). What is resulting effect on the following financial statement elements? a) Assets: Understated, Overstated, or No Effect b) Cost of Goods Sold: Understated, Overstated, or No Effect c) Gross Profit: Understated, Overstated, or No Effect d) Net Income: Understated, Overstated, or No Effect 2) If manufacturing...

  • During a maternity leave of the full-time bookkeeper, a temporary employee was involved in the following...

    During a maternity leave of the full-time bookkeeper, a temporary employee was involved in the following transactions. 1. A payment by cheque for $480 to a repair shop for fixing the truck was debited to the Vehicles account and a credit to Cash. 2. A deposit for a collection on account of $1,000 was debited to Cash and credited to Service Revenue. 3. A cheque for $440 to pay for advertising expense was recorded as a Debit to Rent Expense...

  • Which of the following is a fixed factory overhead cost: office president's salary advertising expense direct...

    Which of the following is a fixed factory overhead cost: office president's salary advertising expense direct labor costs factory building rent Question 3 (6 points) Costs of goods that have been started but not completed by the end of the period will be recorded as...? COGM Ending Inventory WIP Ending Inventory FG COGS

  • explain 40. ABC Grocery Store uses the periodic inventory system. During 2017, the company properly recorded...

    explain 40. ABC Grocery Store uses the periodic inventory system. During 2017, the company properly recorded all purchases and had an accurate count of ending inventory. The ending inventory for 2016, however, had been understated. What effect, if any, would this have on Cost of goods sold and Net income in 2017? a. b. c. d. Cost of goods sold understated; Net income overstated Cost of goods sold understated; Net income understated Cost of goods sold overstated; Net income understated...

  • 8. Fran Company's ending inventory for 2018 is understated by $5,000. The effects of this error...

    8. Fran Company's ending inventory for 2018 is understated by $5,000. The effects of this error on the 2018's cost of goods sold and net income, respectively are: a. Understated and overstated b. Overstated and understated c. Overstated and overstated d. Understated and understated 9. In selecting an inventory costing method, give one issue that might be considered as part of the decision process.

  • 1.Indicate the proper journal entry to record payment of a cash dividend previously declared: Select one:...

    1.Indicate the proper journal entry to record payment of a cash dividend previously declared: Select one: a. Debit Cash, credit Dividend Payable b. Debit Dividends, credit Cash 2.A bookkeeper erroneously recorded a $7 accrual of wages payable using this journal entry: Sales Discount $7 Inventory $7 Indicate the effect of the error on Expenses, Assets, and Liabilities, respectively: Select one: a. No Error, Understated, No Error b. Overstated, No Error, Understated c. Understated, Understated, Understated d. No Error, No Error,...

  • 73. The freight paid on goods purchased F.O.B. shipping point was debited to the Freight Expense...

    73. The freight paid on goods purchased F.O.B. shipping point was debited to the Freight Expense account. This error would cause: a. the period end assets to be understated b. the period end liabilities to be understated c. the period’s net income to be overstated d. None of the above. 74. The return of merchandise was recorded as a debit to Accounts Payable and a credit to Purchases. This error would cause: a. the period end assets to be understated...

  • Travis Company's records show that overhead was overapplied y $12,400 last year. This overapplied overhead was...

    Travis Company's records show that overhead was overapplied y $12,400 last year. This overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year. In tring to determine why overhead was overapplied by such a large amount, the company has discovered that $7,600 of depreciation on factory equipment was charged to administrative expense in error. Given the above information, which of the following statements is true? a. The company's net income is understated...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT