When the Consumption Function Is Expressed as C = Ca

question 56

Multiple Choice

When the consumption function is expressed as C = Ca + b (1- t) y, "t" is the

• A) income tax rate.
• B) sales tax rate.
• C) net tax rate.
• D) lump- sum tax rate.

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Definitions:

Variable Overhead Rate

The ratio of variable overhead costs to an activity base such as units produced or direct labor-hours, used for costing purposes.

Fixed Manufacturing Overhead

Costs related to manufacturing that do not change with the level of production, such as factory rent and salaries of supervisory personnel.

Budget Variances

The differences between budgeted amounts and actual amounts.

Machine-Hours

An allocation base in cost accounting used to assign costs to products or services, based on the hours of machine operation required.