Find the Average Payment Period If Accounts Payable Is $20,000

question 45

Multiple Choice

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

• A) 10
• B) 36.5
• C) 25
• D) 14.6

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated based on estimated costs and activity levels.

Predetermined Overhead Rate

An estimated rate used to apply manufacturing overhead to products or job orders, based on expected activity levels.

Manufacturing Overhead

Expenses tied to the production process that do not include direct labor or materials are known as indirect costs.

Variable Costs

Variable costs are expenses that vary directly with the level of production or sales volume, such as materials and labor.