An Allocation of Extra Funds to Cover Uncertainties and Improve

question 12

Multiple Choice

An allocation of extra funds to cover uncertainties and improve chances that the project can be completed within the timeframe originally specified is a:

• A)Setback.
• B)Budget contingency.
• C)Reallocation budget.
• D)Reserve line budget.

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Definitions:

Variable Overhead Rate

A rate used to assign variable overhead costs to units of production, based on an activity driver such as labor hours or machine hours, fluctuating with changes in production activity.

Overhead Efficiency

The effectiveness with which a business uses its overhead expenses to produce goods or services.

Fixed Overhead Budget

A forecast of the fixed costs that a company expects to incur over a certain period, helping in planning and controlling expenses.

Fixed Overhead Volume

The portion of fixed overhead costs that reflect the difference between actual production volume and the standard or expected production volume.