Which of the Following Are the Two Most Common Allocation

question 46

Multiple Choice

Which of the following are the two most common allocation bases for factory overhead?

• A) Total overhead dollars and machine hours
• B) Direct labor hours and machine hours
• C) Direct labor hours and factory expenses
• D) Machine hours and factory expenses

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within a business’s normal operating cycle if longer than a year.

Supplies

Items used in the operation of a business that are consumed or not resalable, such as office supplies or manufacturing inputs.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest.