Actual Costing Allocates Indirect Costs Based on the Predetermined Indirect-Cost

question 37

True/False

Actual costing allocates indirect costs based on the predetermined indirect-cost rates multiplied by the actual quantities of the cost-allocation bases.

---

Definitions:

Profit Margin

A profitability ratio calculated by dividing net income by revenue, expressing the percentage of revenue that translates into net income.

Collection Policy

The procedures and guidelines used by a company to manage and collect accounts receivable.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Salaries Payable

An account representing the amounts owed to employees for work performed but not yet paid.