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The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged:
What is the Digger Division's return on investment?
Predetermined Overhead Rate
An estimated rate used to assign manufacturing overhead costs to individual units of production.
Machine-Hours
A measure of the amount of time machines are operated, used as a basis for allocating manufacturing overhead costs in production.
Variable Manufacturing Overhead
Refers to the costs that vary with the level of production output, including items such as indirect materials and electricity to run machinery.
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead costs to products or job orders, calculated before the accounting period begins based on an estimate.
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