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The Following Question Relate to PQR, Which Has the Following

question 25

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The following question relate to PQR, which has the following ratios: return on assets, (ROA) 12%; return on equity (ROE) 14%; and current ratio (CR) of 2:1.
-The company changed accounting methods by deciding to capitalise rather than expense a research and development outlay.This will:


Definitions:

Overhead Applied

The portion of estimated overhead costs that is allocated to each unit of production or activity based on a predetermined rate.

Activity-Based Costing

An accounting method that assigns costs to products and services based on the resources they consume. This approach seeks to provide more accurate cost information by attributing overhead costs to specific activities.

Overhead Assigned

The allocation of indirect costs to specific products, services, or activities within a business.

Traditional Costing

A costing methodology that allocates manufacturing overhead based on volume-related measures such as labor hours or machine hours.

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