Throughput Costing Assumes That Product Costs Other Than Materials Tend

question 94

True/False

Throughput costing assumes that product costs other than materials tend to be fixed in the short run.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity measure, like labor hours or machine hours.

Machine-Hours

A measure of production activity that quantifies the number of hours machines are operated in the production process.

Fixed Component

A cost that does not change with the level of output or activity over a particular period of time.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs rather than actual costs.