When Developing an Estimated Overhead Allocation Rate, Which of the Following

question 102

Multiple Choice

When developing an estimated overhead allocation rate, which of the following is used in the numerator?

• A) Actual annual overhead cost
• B) Estimated output in units
• C) Estimated annual overhead cost
• D) Estimated direct labor hours

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Definitions:

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in quantity demanded resulting from a change in the price of a good, making other goods more or less expensive relative.

Saving

The process of setting aside a portion of current income for future use or investment.

Capital Income

Income generated through investments, such as dividends from stocks, interest from bonds, or rent from real estate, as opposed to earned income from labor.