The Specific Identification Method Is Desirable When a Company Sells

question 4

True/False

The specific identification method is desirable when a company sells a large number of low-unit-cost items.

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Definitions:

Variable Overhead

The indirect expenses that fluctuate with the level of production activity, such as utilities for the manufacturing plant.

Overhead Absorption Rate

Budgeted overhead divided by budgeted volume. Also called overhead application rate.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process.

Standard Volume

The amount of volume the plant would have generated if each unit of product manufactured used precisely the standard unit of volume allowed.