Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:
A. the company's net income was overstated.
B. the company's income statement portrayed a more favorable position than actually existed.
C. product costs were overstated.
D. management bonuses were underpaid.
Answer: D
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