An Activity-Based Costing System Allocates Factory Overhead Rates to Products

question 18

Multiple Choice

An activity-based costing system allocates factory overhead rates to products or services using:

• A) a single plantwide overhead rate.
• B) the cost of activities based on an activity rate times the number of activity-based usage quantities.
• C) an allocation of budgeted revenues produced by a product or service.
• D) an end-of-year allocation of costs to products or services.

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Definitions:

UCC Obligation

A term referring to responsibilities or duties that are established under the Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.

Third-party Financing

Refers to funding provided by an entity that is neither the borrower nor the direct provider of goods or services, often used in sales agreements to facilitate purchases.

Perfect Tender Rule

A principle in contract law requiring goods delivered under a sales contract to exactly meet the terms of the agreement.

Contract Specifications

Detailed, precise descriptions of the terms, conditions, and obligations agreed upon by parties in a contract, often defining the scope, quality, and timelines of work or services.