Even Though a Firm Factors Its Receivables to a Finance

question 72

True/False

Even though a firm factors its receivables to a finance company, it is still liable if the account becomes uncollectible.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated by dividing estimated overhead costs by an allocation base.

Machine-Hours

A measure of production time, representing the hours a machine is operated within a given period.

Direct Labor-Hours

A metric for quantifying the manual work done by employees on the production floor, correlating with the labor costs of manufacturing.

Plantwide Predetermined Rate

A single overhead rate calculated by dividing total estimated manufacturing overhead costs by the total estimated amount of allocation base, applied throughout the plant.