Normal Costing Overhead Rates Are Developed at the Beginning of Each

question 69

Multiple Choice

Normal costing overhead rates are developed at the beginning of each period based on the:

• A) Actual overhead costs of the previous period
• B) Actual activity level of the previous period
• C) Direct labour hours at maximum capacity
• D) Expected activity level of the coming period

---

Definitions:

Retained Earnings

The portion of a company's profit that is held or retained and not paid out as dividends to shareholders.

Interest Rate Swap

A financial derivative contract in which two parties agree to exchange one stream of interest payments for another, based on a specified principal amount.

Fixed Rate

A fixed rate refers to an interest rate for a loan or mortgage that remains constant over the term of the loan.

Variable Rate

An interest rate which can change over the period of the loan, credit, or investment depending on market conditions.