The Objective of the Fourth Step in Cost Estimation, Graphing

question 86

Multiple Choice

The objective of the fourth step in cost estimation, graphing the data, is intended to:

• A) Identify unusual patterns.
• B) Show data in two dimensions.
• C) Enhance the cost estimation process.
• D) Allow for subjectivity in cost estimation.

---

Definitions:

Predetermined Overhead Rate

A calculated rate designed to assign estimated indirect manufacturing costs to products or services, based on a planned activity level.

Fixed Component

A portion of total costs that does not change with the level of activity or production volume, such as rent or salaries.

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the fixed overhead costs that were budgeted.

Standard Machine-Hours

The estimated hours a machine is expected to operate under normal conditions.