ABC Company Wants to Be Prepared for the ASEAN Free

question 119

Multiple Choice

ABC Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing facilities in one or more ASEAN countries. The best choice for ABC Company is

• A) a joint venture.
• B) a licensing agreement.
• C) totally owned facilities.
• D) exporting.
• E) sales offices.

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Definitions:

Normal Costing

An accounting method that assigns costs to products based on direct materials, direct labor, and an allocated portion of manufacturing overhead based on normal activity levels.

Work in Process

Inventory items that are in the production process but are not yet complete.

Predetermined Overhead

An estimated rate used to allocate manufacturing overhead costs to products based on planned activity levels.

Underapplied Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to an underestimation of product costs.