Explain How an Activity Cost Driver Rate Is Determined

question 49

Essay

Explain how an activity cost driver rate is determined.

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Definitions:

Authorized Shares

The highest quantity of shares that a company can legally distribute, as stated in its charter.

Noncumulative

Pertaining to preferred stock dividends, where dividends not paid in one period do not accumulate and are not required to be paid in future periods.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually with fixed dividends.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.