Characteristics of Profit-Sharing Plans Include All of the Following with the Exception

question 6

Multiple Choice

Characteristics of profit-sharing plans include all of the following with the exception of:

• A)A predetermined formula is used to allocate employer contributions to individual employees and to establish benefit payments.
• B)Forfeitures of benefits under the plan may be reallocated to the remaining participants.
• C)The company must make contributions to the plan if it has profits during the year.
• D)Annual employer contributions are not required,but substantial,recurring contributions must be made to satisfy the requirement that the plan be permanent.

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Definitions:

Underapplied Manufacturing Overhead

Occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred, resulting in a cost variance.

Prorated

Dividing or allocating amounts proportionally based on specific metrics or criteria, often used in billing and cost sharing.

Overapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead cost is greater than the actual overhead incurred.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold to customers.