The Predetermined Indirect Cost Allocation Rate Is Computed as

question 62

Multiple Choice

The predetermined indirect cost allocation rate is computed as

• A)total estimated indirect costs / total estimated amount of the allocation base.
• B)total amount of the allocation base / total estimated indirect costs.
• C)total estimated indirect costs + total estimated amount of the allocation base.
• D)total amount of the allocation base - total estimated indirect costs.

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Definitions:

Marginal Benefit

Marginal benefit is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Social Cost

The total cost to society, including both private costs borne by the producer and external costs borne by others, of producing a good or service.

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, all selling identical products, with no single entity able to influence the market price.

Externalities

Costs or benefits that affect a party who did not choose to incur that cost or benefit, often leading to market failure if not corrected by government intervention.