The Cost Driver Chosen for Applying Factory Overhead Costs Should

question 45

Multiple Choice

The cost driver chosen for applying factory overhead costs should be the cost driver that:

• A) incurs the least administration cost
• B) causes most of the overhead costs
• C) confers a competitive advantage
• D) is easiest to understand

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Definitions:

Note Payable

A financial obligation or loan evidenced by a written promise to pay a specific amount on a future date or over a certain period.

Current Liability

Financial obligations or debts that a company is expected to settle within one year or within its normal operating cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle, whichever is longer.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities; essentially the net worth of a company.