Factors Contributing to a Decline in the Usefulness of a Fixed

question 167

Multiple Choice

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

• A) salvage and functional
• B) physical and functional
• C) residual and salvage
• D) functional and residual

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Definitions:

Units Produced

This refers to the total number of complete units manufactured during a specific period by a company.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs based on the volume of production.

Standard Factory Overhead Rate

The predetermined rate used in cost accounting to allocate estimated overhead costs to individual units of production based on a consistent measure, like labor hours.

Machine Hour

A measure of the amount of time a machine is operated, used in allocating manufacturing costs to products based on the number of hours the machines are used in production.