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Fixed Manufacturing Overhead
Costs associated with manufacturing that remain constant regardless of the level of production, such as salaries of management and rent of the facility.
Absorption Costing
A costing method that includes all manufacturing costs, both fixed and variable, in the cost of goods sold.
Predetermined Overhead Rate
A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to individual products based on a certain activity base.
Normal Cost System
A costing system in which overhead costs are applied to a job by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job.
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