All of the Following Are Advantages of Developing a Predetermined

question 25

Multiple Choice

All of the following are advantages of developing a predetermined overhead application rate except:

• A) Short-run fluctuations in volume of output are normalized.
• B) In a job order system, unit costs can be determined as soon as jobs are completed.
• C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process.
• D) Actual overhead will always be less than applied overhead.

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Definitions:

Selling Company

A business entity that primarily engages in selling goods or services to consumers or other businesses.

Sales Invoice

A bill sent to customer(s) reflecting a credit sale.

Gross Method

Gross Method in accounting is a method for recording purchases at the full invoice price without deducting any cash discounts offered.

Periodic Inventory Method

An accounting approach that updates inventory and cost of goods sold at the end of an accounting period based on a physical count.