If a US Importer Can Purchase 10,000 British Pounds for $20,000, the $20,000

question 178

Multiple Choice

If a U.S. importer can purchase 10,000 British pounds for $20,000, the rate of exchange is

• A) $1 = 2 British pounds in the United States.
• B) $2 = 1 British pound in the United States.
• C) $1 = 2 British pounds in Great Britain.
• D) $0.50 = 1 British pound in Great Britain.

---

Definitions:

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products or job orders based on a selected activity base, such as direct labor hours.

Estimated Overhead

Projected costs of indirect materials, labor, and other expenses that are necessary for production but are not directly traceable to specific products.

Allocation Factor

A criterion or formula used to distribute costs or revenues among various departments, products, or projects based on relevant measures such as time, usage, or volume.

Direct Labor Hours

The total hours worked by employees directly involved in the production process, used as a measure for allocating labor costs to products or services.