In a Merchandising Business, Operating Income Plus Operating Expenses Is

question 217

Multiple Choice

In a merchandising business, operating income plus operating expenses is equal to

• A) cost of merchandise sold
• B) cost of merchandise available for sale
• C) sales
• D) gross profit

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Definitions:

Overhead Costing Accuracy

The degree to which allocated overhead costs accurately represent the actual expenses incurred by the production process or specific products.

Plantwide Overhead Rate

An overhead allocation rate used throughout an entire plant or company to allocate indirect costs to products.

Overhead Allocation Base

A measure used to distribute overhead costs among various products or service units within a business.

Machine Hours

A measure of the amount of time machines are operated in the production process, commonly used as an allocation base for assigning overhead costs.