The Predetermined Overhead Rate Is Found by Dividing Total Estimated

question 36

True/False

The predetermined overhead rate is found by dividing total estimated overhead costs by the total estimated volume of the overhead allocation base.

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Definitions:

Periodic Inventory System

A method of inventory valuation in which updates to inventory levels and cost of goods sold are made periodically, such as at the end of the fiscal year.

Gross Method

An accounting approach for recording purchases at the invoice’s gross amount without deducting any cash discounts for early payment.

Merchandise

Goods bought and sold in the course of business operations.

Periodic Inventory System

An accounting system that records inventory purchases during the accounting period but waits until the end of the period to adjust the inventory balances and record cost of goods sold.