Retained Earnings Are the Amounts Left Over from Profitable Operations

question 144

True/False

Retained earnings are the amounts left over from profitable operations since the company's beginning. They are equal to total profits minus all dividends paid to shareholders.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or job orders, based on a related activity (e.g., machine hours or labor hours).

Predetermined Overhead Rate

A predetermined rate for allocating manufacturing overhead to products or job orders, established prior to the period by forecasting both overhead expenses and activity volumes.

Machine-Hours

An indicator of how much is produced or the level of activity, determined by the total hours machines run during the manufacturing process.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate overhead costs to products or job orders based on a specific activity base such as direct labor hours or machine hours.