Select the Account That Would Be Increased to Show Each

question 191

Multiple Choice

Select the account that would be increased to show each of the following costs.
-The costs to pave a parking lot

• A)Land
• B)Land Improvements
• C)Buildings
• D)Machinery and Equipment
• E)An Expense Account

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Definitions:

Fixed Manufacturing Overhead

Costs associated with manufacturing that remain constant regardless of the level of production, such as salaries of management and rent of the facility.

Absorption Costing

A costing method that includes all manufacturing costs, both fixed and variable, in the cost of goods sold.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to individual products based on a certain activity base.

Normal Cost System

A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.