When Sherman Bought Gas, He Noticed the Convenience Store Offered

question 14

Multiple Choice

When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid cash rather than used his credit card.The convenience store was offering him a

• A)trade discount.
• B)cash discount.
• C)promotional allowance.
• D)rebate.
• E)functional discount.

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process, used as a basis for allocating costs to products.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to each unit of production, based on estimated or budgeted overhead costs and activity.

Machine-Hours

A measure of production output or activity level based on the total hours machines are operating.