Which of the Following Is True

question 26

Multiple Choice

Which of the following is true?

• A)In developing a standard cost for direct materials, a price factor and a quantity factor must be considered.
• B)A direct labour price standard is frequently called the direct labour efficiency standard.
• C)The standard predetermined overhead rate must be based on direct labour hours as the standard activity index.
• D)The direct materials price standard should be based on the production department's best estimate of the cost of raw material.

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Definitions:

Equipment

Tangible assets used in operations, such as machinery or office hardware, that play a key role in business operations and productivity.

Allowance for Repairs

A reserve of funds set aside by a company to cover anticipated repair costs for its assets.

Deferred Credit

Liabilities or income that have been recognized but not yet earned, and therefore, postponed to a future accounting period.

Contra Account

An account that is used to reduce the value of a related account on a financial statement and presents the net balance of both accounts.