An Activity-Based Overhead Rate Is Computed as Follows

question 15

Multiple Choice

An activity-based overhead rate is computed as follows:

• A) actual overhead divided by actual use of cost drivers.
• B) estimated overhead divided by actual use of cost drivers.
• C) actual overhead divided by estimated use of cost drivers.
• D) estimated overhead divided by estimated use of cost drivers.

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Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows in a given period, indicating its ability to generate cash.

Managing Activities

The actions taken by an organization to plan, organize, direct, and control its operational, financial, and administrative tasks.

Financing Activities

Activities relating to raising money from investors and creditors such as the issuance of stocks and bonds and long-term notes; also, repurchase of outstanding stock and retiring bonds and notes as well as paying dividends.

Retained Earnings Activities

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested into the business or kept as a reserve.