When the Predetermined Overhead Rate Is Based on the Level

question 225

True/False

When the predetermined overhead rate is based on the level of activity at capacity, an item called the Cost of Unused Capacity may appear to be treated as a period expense on income statements prepared for internal management use.

---

Definitions:

Tenancy Termination

Refers to the legal process or conditions under which a rental agreement between a tenant and landlord is ended.

Notice

A formal or informal communication or indication that informs a party of a fact, decision, or legal process, which may have implications for rights or duties.

Advance

Money paid or received before it is due, often used in contexts like salary advances or advance payments.

Periodic Tenancy

A tenancy agreement that automatically renews for a fixed period, such as monthly or yearly, until notice is given to terminate it.