The Benefits of Comparing Actual Performance of the Operations Against

question 106

Multiple Choice

The benefits of comparing actual performance of the operations against planned goals include all of the following except:

• A) providing prompt feedback to employees about their performance relative to the goal
• B) preventing unplanned expenditures
• C) helping to establish spending priorities
• D) determining how managers are performing against prior years' actual operating results

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Definitions:

Predetermined Overhead Rate

This rate is used to allocate overhead costs to products or services based on a specific formula, often involving direct labor hours or direct material costs, aiding in the budgeting and costing process.

Direct Labor Costs

The wages and related benefits paid to employees who are directly involved in the production of goods or the provision of services.

Factory Overhead Applied

Costs associated with the production process that are not directly tied to a specific product, such as depreciation or utilities, allocated to products based on a systematic approach.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, based on a particular activity (e.g., machine hours, labor hours).