When We Use an Annual Overhead Rate Consistently Throughout the Year

question 24

Multiple Choice

When we use an annual overhead rate consistently throughout the year for product costing,without altering it month to month,this is called a(n) ________.

• A) direct costing system
• B) absorption costing system
• C) normal costing system
• D) constant costing system

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Definitions:

Sales Dollars

A measurement of revenue generated from the sale of goods or services, expressed in monetary units.

Net Operating Income

The total profit of a company after operating expenses are deducted from operating revenues, but before interest and taxes are deducted.

Divisional Segment Margin

The profit or loss generated by a specific division or segment of a business, highlighting its financial performance independently.

Net Operating Income

Earnings from a firm's principal operations, not including interest and tax deductions.