Which of the Following Is Least Likely to Render Material

question 70

Multiple Choice

Which of the following is least likely to render material a quantitatively small misstatement material?

• A)Affects the registrant's compliance with regulatory requirements.
• B)Masks a change in earnings or other trends.
• C)Arises from an item not capable of precise measurement.
• D)The transaction involves a related party.

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Definitions:

Predetermined Overhead Rate

A predetermined overhead rate is calculated by dividing estimated manufacturing overhead costs by an allocation base, used to assign overhead costs to products.

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with the level of production, such as salaries of managers and depreciation of factory equipment.

Variable Manufacturing Overhead

Costs associated with manufacturing that vary directly with the levels of production output, such as raw materials and labor.

Overhead Applied

The allocated manufacturing overhead costs to individual products or jobs based on a predetermined rate.