Solve the Problem

question 4

Multiple Choice

Solve the problem. Round to the nearest hundredth, if necessary.
-What is 5% of 500?

• A) 25
• B) 2.5
• C) 0.25
• D) 250

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead costs to products, calculated before the fiscal period begins based on estimated costs and activity levels.

Machine-Hours

A measure of production activity that quantifies the number of hours machines are run in the manufacturing process.

Job-Order Costing System

An accounting system that accumulates costs by individual jobs or orders, used in manufacturing and service environments where each job is distinct.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on an estimate of total overhead costs and an allocation base.