The Accounts Receivable Turnover Ratio Is Computed by Dividing

question 1

Multiple Choice

The accounts receivable turnover ratio is computed by dividing

• A) gross sales by ending net receivables.
• B) gross sales by average net receivables.
• C) net sales by ending net receivables.
• D) net sales by average net receivables.

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Definitions:

Total Manufacturing Cost

The total expenses directly related to the manufacture of products, encompassing the price of raw materials, wages for direct labor, and indirect manufacturing costs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual jobs or units based on a certain activity base, such as labor hours or machine hours, calculated before the period begins.

Machine-Hours

A measure of production or work volume calculated by the number of hours machines are operating.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base.