A Factor Having a "Cause-And-Effect" Relationship with a Cost Object

question 58

Multiple Choice

A factor having a "cause-and-effect" relationship with a cost object is called a(n) :

• A) cost driver.
• B) allocation base.
• C) direct cost.
• D) indirect cost.

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Definitions:

Overapplied Manufacturing Overhead

The condition wherein the overhead allocated during the production process exceeds the actual overhead costs incurred.

Predetermined Overhead Rate

This rate is calculated before a period begins and is used to allocate overhead costs to products based on a chosen activity base.

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the fundamental profitability of the goods or services sold.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, maintenance, and salaries of production managers, not directly attributable to a specific product.