During the Current Year,Kemp Construction Company Built 23 Custom Homes

question 24

Multiple Choice

During the current year,Kemp Construction Company built 23 custom homes that ranged in size from 2,500 square feet to 8,000 square feet.One home was completed each month during January,February,and March.Three homes were completed during April and May.Two homes were completed during each of the months from June through December.Based upon this information,the most appropriate allocation base (i.e.,cost driver) for the assignment of indirect overhead costs to each house would be the:

• A) Number of homes built during the month.
• B) Number of months in the year.
• C) Number of homes built during the year.
• D) Size of the home.

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Definitions:

Type II Error

A statistical error that occurs when the null hypothesis is not rejected when it is false, also known as a "false negative" finding.

Level Of Significance

The threshold probability used in hypothesis testing to determine if the null hypothesis can be rejected, typically denoted by alpha (α).

Power Of The Test

The likelihood that a test will correctly reject a false null hypothesis, indicating the test's sensitivity.

Null Hypothesis

A hypothesis that there is no significant difference between specified populations, any observed difference being due to sampling or experimental error.