Dividing Estimated Total Factory Overhead Costs by Estimated Activity Base

question 51

Multiple Choice

Dividing estimated total factory overhead costs by estimated activity base will give the _____.

• A) underabsorbed factory overhead rate
• B) predetermined factory overhead rate
• C) ​overabsorbed factory overhead rate
• D) ​actual factory overhead rate

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Definitions:

Cost Method

An accounting approach where investments are recorded at their acquisition cost, without adjustment for increases or decreases in market value.

Goodwill

An intangible asset arising when a company acquires another for more than the fair value of its net identifiable assets.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to investors.

Non-controlling Interest

The share of ownership in a subsidiary that doesn't belong to the parent company.