Activity-Based Costing Uses Pre-Determined Overhead Rates to Allocate Costs

question 70

True/False

Activity-based costing uses pre-determined overhead rates to allocate costs.

Know how to record and handle transactions involving accounts receivable, including factoring, credit sales, and the use of promissory notes.

Comprehend the methods for calculating and recording interest on notes receivable.

Grasp the accounting treatments for different types of receivables transactions, such as sales with bank credit cards and pledging accounts receivable as loan collateral.

Recognize the role and mechanics of the allowance method in accounting for bad debts.

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Definitions:

Investment Turnover

Investment turnover measures how efficiently a company generates sales from its investment in fixed assets.

Profit Margin

The percentage of revenue remaining after all expenses, taxes, and costs have been deducted from total sales.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit by the cost of the investment.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.