When Asked to Provide an Estimate of an Irrigation System,Pete

question 8

Multiple Choice

When asked to provide an estimate of an irrigation system,Pete looked from one end of the field to the other,licked a finger and held it in the air,squinted into the sun and said $25,000,give or take 30%.The technique employed for cost estimation is:

• A)Parametric.
• B)Comparative.
• C)Definitive.
• D)Ballpark.

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Definitions:

Manufacturing Overhead

The indirect production costs that are not directly associated with the manufacturing of products, such as utilities and rent for the manufacturing facility.

Predetermined Overhead Rate

A computed rate used for applying overhead costs to products or job orders, calculated before the period begins based on estimated costs.

Machine-Hours

The total hours that machinery is operating during a specific period, often used for allocating manufacturing overhead costs.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production.