All the Following Choices Exist for Defining the Denominator Volume

question 97

Multiple Choice

All the following choices exist for defining the denominator volume (denominator activity level) for assigning fixed overhead costs in a standard cost system, except:

• A) Budgeted capacity utilization.
• B) Actual capacity utilization.
• C) Theoretical capacity.
• D) Practical capacity.
• E) Normal capacity.

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Definitions:

Trial Balance

An accounting report that lists the balances of all ledgers accounts in order to verify that total debits equal total credits.

Factoring Arrangement Without Recourse

A financial transaction in which a business sells its receivables to a third party (a factor) at a discount, without the seller being responsible if the debtor fails to pay.

Loss on Sale of Receivables

A financial loss incurred when the sale price of accounts receivable is less than their carrying amount on the balance sheet.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total accounts receivable on the balance sheet, accounting for estimated uncollectible debts.