A Company That Finances a Relatively Large Portion of Its

question 205

True/False

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs.

Variable Manufacturing Overhead

Costs incurred during the production process that vary with the level of production, such as utilities for the manufacturing plant.

Direct Labor-Hours

A measure of the labor time directly involved in the production of goods or services, typically used as a basis for allocating manufacturing overhead costs.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to products based on a certain activity (e.g., machine hours).