Compensating Balances Refer to Charges That Compensate the Bank for Work

question 208

True/False

Compensating balances refer to charges that compensate the bank for work it does to balance customer accounts.

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Definitions:

Predetermined Overhead Rate

A rate calculated before the manufacturing process begins, used to allocate manufacturing overhead costs to individual units of production based on a certain basis (e.g., machine hours or labor hours).

Machine-Hours

The total hours that machines are in operation during a specific period used as a measure for allocating costs or determining efficiency.

Job-Order Costing System

A costing method used to calculate the costs associated with individual jobs or orders, tracking direct labor, direct materials, and manufacturing overhead per job.

Predetermined Overhead Rate

It is a rate used to allocate estimated overhead costs to cost objects based on a chosen activity base, calculated before the period begins.