The Two Main Advantages of Using Predetermined Factory Overhead Rates

question 58

Multiple Choice

The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to:

• A)Simplify the accounting process.
• B)Provide cost information on a timely basis.
• C)Insure transmission of correct data.
• D)Extend the useful life of the cost data.
• E)Adjust for variances in data sources.

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Definitions:

Government Funding

Financial support provided by the government for various programs, projects, or sectors to achieve economic or social objectives.

Pollution Abatement

Measures and actions taken to reduce, control, or eliminate pollution from various sources in order to protect the environment.

Law of Diminishing Returns

A principle stating that if one factor of production is increased while other factors are held constant, the marginal product of the increased factor will eventually decrease.

Moral Hazard

A situation where one party takes risks because they know they will not have to bear the full consequences of their actions.