A Service Organization Would Be Most Likely to Use a Predetermined

question 95

Multiple Choice

A service organization would be most likely to use a predetermined overhead rate based on

• A)machine hours.
• B)standard material cost.
• C)direct labor.
• D)number of complaints.

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Definitions:

Expected Return

The anticipated or forecasted return on an investment based on historical or projected performance data.

Systematic Risk

The risk inherent to the entire market or market segment, also known as non-diversifiable risk or market risk.

Market Risk Premium

The higher return an investor foresees from investing in a market portfolio with associated risks as opposed to choosing completely safe assets.

Risky Asset

An asset that carries a higher degree of risk of loss, but also offers a higher potential return.