The Operating Cycle Must Not Only Generate Cash to Supply

question 20

Short Answer

The operating cycle must not only generate cash to supply ________________________________________ needs,it must generate sufficient cash to service debt.

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Definitions:

Predetermined Overhead Rate

A calculated rate used to apply manufacturing overhead to products or job orders, based on a related activity measure such as labor hours.

Variable Manufacturing Overhead

The costs that vary with production volume, such as indirect materials, utilities, and labor involved in the manufacturing process.

Machine-Hour

A measure of production output or activity based on the number of hours a machine is operated.

Fixed Manufacturing Overhead

A consistent cost incurred during manufacturing that does not vary with the level of production, such as salaries of managers or rent.