A Company Has a Standard Cost System in Which Fixed

question 166

True/False

A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity has no effect on the fixed portion of the predetermined overhead rate.

---

Definitions:

Sacrifice Ratio

An economic ratio that measures the effect of rising unemployment on the reduction of inflation within an economy.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, eroding purchasing power.

Annual Output

The total value of goods and services produced by an economy or a firm in one year.

Rational Expectations

The economic theory suggesting individuals make decisions based on their logical expectations for the future, effectively using all available information to predict future events accurately.