When the Activity Base Used in Calculating the Predetermined Overhead

question 107

Multiple Choice

When the activity base used in calculating the predetermined overhead rate is units of output, which of the following also must be known before overhead can be applied to a particular job?

• A) Actual overhead incurred during the period
• B) Estimated direct labor hours for all jobs during the period
• C) Actual units produced for that job
• D) Actual units produced for all jobs during the period

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Definitions:

Cash Outlay

The total amount of cash that a company spends on expenses, investments, and transactions.

Alternative Investments

Investments in non-traditional assets, such as real estate, hedge funds, or commodities, as opposed to stocks and bonds.

Accumulated Depreciation

The contra asset account credited when recording the depreciation of a fixed asset.

Replacement Equipment

Replacement equipment refers to new or updated equipment purchased to replace old or obsolete versions to maintain or enhance operational efficiency.