The Basis of Accounting Determines When Transactions and Events Are

question 16

True/False

The basis of accounting determines when transactions and events are recognized.

Understand the principles of job-order costing.

Calculate predetermined overhead rates for different departments or activities.

Allocate manufacturing overhead to specific jobs based on relevant activity bases.

Interpret the effects of using machine-hours versus direct labor-hours as allocation bases.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product cost calculations, excluding fixed manufacturing overhead.

Net Operating Income

Net Operating Income (NOI) is the total pre-tax profit a company generates from its operations, excluding expenses such as interest and taxes.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead.

Net Operating Income

Profit or loss from a company's operations after all operating expenses are subtracted from operating revenues, but before interest and taxes are deducted.