When Rework Is Normal and NOT Attributable to a Specific

question 67

True/False

When rework is normal and NOT attributable to a specific job, the costs of rework are charged to manufacturing overhead and are spread, through overhead allocation, over all jobs.

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Definitions:

Machine-Hours

The total hours that machinery is in operation during a production process.

Markup

The amount added to the cost price of goods to cover overhead and profit, determining the selling price.

Manufacturing Overhead

Manufacturing overhead includes all manufacturing costs other than direct materials and direct labor, such as rent, utilities, and depreciation on manufacturing facilities.

Predetermined Overhead Rate

A rate calculated at the beginning of an accounting period to allocate overhead costs to products or services based on a relevant activity base.