Which Formula Correctly Identifies the Predetermined Indirect Cost Rate in an Activity-Based

question 56

Multiple Choice

Which formula correctly identifies the predetermined indirect cost rate in an activity-based costing system?

• A)Actual indirect cost divided by the actual volume of the allocation base.
• B)Estimated indirect cost divided by the actual volume of the allocation base.
• C)Actual cost divided by the estimated volume of the allocation base.
• D)Estimated indirect cost divided by the estimated volume of the allocation base.

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Definitions:

Experimental Study

A research method involving the manipulation of variables to test hypotheses and observe the effects on an outcome.

Cohesiveness

The degree to which members of a group are attracted to one another and motivated to stay in the group.

Randomly Assign

The process of allocating people or resources to groups or categories in a way that lacks any specific pattern, order, or objective.

Systems Theory Approach

A perspective that views entities as open systems interacting with their environments and emphasizes the interrelatedness of components within an entity.