Refer to the Graph Shown

question 86

Multiple Choice

Refer to the graph shown. With an effective price ceiling at Pc, total surplus is reduced by:

• A)rectangles B and C.
• B)rectangles A and D.
• C)triangles E and F.
• D)rectangle B and triangle E.

---

Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base, such as direct labor hours.

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as utilities for machinery.

Fixed Manufacturing Overhead

The set of costs associated with the production process that do not change with the level of production, including rent, salaries, and insurance.

Job-Order Costing System

A cost accounting system that accumulates manufacturing costs separately for each job or batch.