In March, Chassis Prep Counts Its Inventory

question 51

Multiple Choice

In March, chassis prep counts its inventory. In June, the cabinet shop does the same thing. In September, appliances counts its inventory. This inventory system is known as

• A) cycle counting.
• B) perpetual.
• C) physical.
• D) two-bin.

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Definitions:

Standard Direct Labour-Hours

The estimated amount of labor time that should be required to produce one unit of a product.

Fixed Manufacturing Overhead Rate

The rate at which fixed manufacturing overhead costs are allocated to products, typically based on labor hours or machine hours.

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.

Applied Fixed Overhead Cost

The portion of fixed overhead costs that is allocated to the production process during a specific period.