The Fixed Factory Overhead Application Rate Is a Function of a Predetermined

question 110

Multiple Choice

The fixed factory overhead application rate is a function of a predetermined activity level. If standard hours allowed for actual output equal this predetermined activity level for a given period, the volume variance will be: (CPA adapted)

• A) zero.
• B) favorable.
• C) unfavorable.
• D) either favorable or unfavorable, depending on the budgeted overhead.

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Definitions:

Depreciation Rate

The rate at which an asset loses its value over time, calculated for accounting and tax purposes.

Stem-And-Leaf Plot

A type of graph or data display that shows frequency; the numbers to the left of the vertical line (stem) represent the tens place digit; the numbers to the right of the vertical line (leaf) represent the digits in the ones place, in ascending order.

Median Price

The middle value in a set of prices, with half of the data points being higher and half being lower.

Quartiles

Three values represented by Q1, Q2, and Q3 that divide the distribution into four subsets that each contains 25% of the data.