Which of the Following Is Part of the Approach to Computing

question 55

Multiple Choice

Which of the following is part of the approach to computing the budgeted indirect cost allocation rate?

• A)identify the costs which are part of the indirect cost pool
• B)identify costs associated with the direct cost pool
• C)estimate the cost items for direct cost pool
• D)adjust the cost allocation base for variances
• E)divide the total quantity of the cost allocation base into the total costs in the direct cost pool

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Definitions:

Beginning inventory

This is the value of all the inventory (raw materials, work-in-process, and finished goods) that a company has at the start of an accounting period.

LIFO

An inventory valuation method that assumes the last items placed into inventory are the first ones sold; stands for Last In, First Out.

Cost

A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.

Ending merchandise inventory

The final value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.