AIS Study Sometimes Involves Questions with Deterministic Answers

question 64

Multiple Choice

AIS study sometimes involves questions with deterministic answers.Which of the following questions is most likely to have a deterministic answer?

• A)How should a company record the purchase of supplies on account in its AIS?
• B)In a corporation with sales of $100,000 annually, what dollar amount should be considered material?
• C)Which processing tools should the AIS use?
• D)Has the conceptual framework achieved the FASB's original objective for developing it?

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Definitions:

Traditional System

A cost accounting system that allocates overhead based on a single or few measures of activity, such as direct labor hours or machine hours.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated before the period begins based on estimated costs and activity levels.

Direct Labor Cost

The expense associated with labor directly involved in the manufacturing of a product.

Direct Labor-Hours

The cumulative hours spent by workers actively engaged in creating a product during the manufacturing stage.