When a Sale Is Described as Being VAT Inclusive, This

question 35

True/False

When a sale is described as being VAT inclusive, this means that the VAT at a rate of 20% on that sale is calculated by dividing the VAT inclusive figure by 6.

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Definitions:

Predetermined Rate

A rate established in advance to allocate certain costs, often overhead, to products or job orders based on an estimated or expected basis.

Fixed Overhead

Expenses that do not vary with the level of production or sales, such as rent, salaries of permanent staff, and insurance.

Planned Activity

Activities or tasks that have been scheduled and outlined in advance as part of a project or process planning.

Overhead Application

The process of assigning overhead costs to specific products or activity bases using a predetermined overhead rate.