A Company May Set Predetermined Overhead Rates Based on Normal,expected

question 59

Multiple Choice

A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would

• A)be the same regardless of the capacity level selected.
• B)be the largest if theoretical capacity had been selected.
• C)be the smallest if theoretical capacity had been selected.
• D)not occur if actual capacity were the same as the capacity level selected.

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Definitions:

CPI

The Consumer Price Index represents a method for tracking the average weighted cost of various consumer goods and services, which is utilized to assess inflation levels.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, indicating how prices are rising on average.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, often used to indicate inflation.

Inflation Rate

The percentage rate of increase in the price level of goods and services in an economy over a period of time.