A Company Is Not Able to Reasonably Estimate Its Bad

question 95

Multiple Choice

A company is not able to reasonably estimate its bad debts expense. The method it may use is:

• A) net realizable value method.
• B) direct write-off method.
• C) aging method.
• D) income statement method.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor. Also known as manufacturing overhead, this includes costs such as utilities, depreciation, and maintenance of equipment.

Direct Labor

Labor costs directly attributable to the production of goods, including wages paid to workers who are actively involved in the manufacturing process.

Direct Material

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Variable Manufacturing Costs

Costs that vary in proportion to changes in the level of production, including direct materials, direct labor, and variable overhead.