Listed Below Are the Current Ratios of Four Different Companies

question 151

Multiple Choice

Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?

• A)2.0
• B)1.8
• C)2.5
• D)2.1

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before the period begins based on the relationship between estimated annual overhead costs and estimated annual operating activity.

Machine-Hours

Machine-hours are a measure of the time a machine is operated within a given period, used for allocating machine-related costs to products based on usage.

Manufacturing Overhead

All production costs other than direct materials and direct labor, including costs related to running the factory.

Direct Labor Cost

The compensation given to employees directly engaged in manufacturing products or delivering services.