A Predetermined Factory Overhead Rate Is Computed by Dividing

question 22

Multiple Choice

A predetermined factory overhead rate is computed by dividing

• A)Actual overhead cost by actual activity.
• B)Actual overhead cost by budgeted activity.
• C)Budgeted overhead by actual activity.
• D)Budgeted overhead by budgeted activity.

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Definitions:

Total Assets

The aggregate of all resources owned by a company, valued in monetary terms.

Creditors

Individuals or institutions to which money is owed by a person or entity.

Profit Margin

Measures the percentage of each dollar of sales that results in net income; computed by dividing net income by net sales.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating how efficiently a company is producing or sourcing its products.